mana.ir

According to MANA, “THE purpose of becoming one this time is so none of us become zero,” said NYK president Tadaaki Naito when his company announced combining its container shipping business with those of MOL and K Line to form Ocean Network Express, or ONE.

By the time the Big Three Japanese shipping groups made their move to team up in container shipping late last year, CMA CGM had bought Neptune Orient Lines, Hapag-Lloyd was merging with United Arab Shipping Co, and Hanjin had gone bust.

The companies did not indicate any plans to combine other parts of their businesses; all of them also operate dry bulk ships, oil and gas tankers and ro-ro carriers.

But ONE thing can lead to another, and barriers appear to be coming down – albeit quietly. Recently, the three companies teamed up in a consortium to develop a trade data sharing platform using blockchain technology. For companies that used to compete intensely among themselves, sharing of trade data is a big step.

Cost is a major factor behind the move and MOL said as much. “Current trading practices rely heavily on bills of lading and other documents. This creates burdens such as additional time to complete procedures and requires additional labour and costs,” it explained.

Teaming up in other areas, such as coal in dry bulk on certain key routes, can lead to significant savings as well as keep them ahead of the pack instead of being a follower.

NYK is already taking steps to cut costs in this segment by reducing ballast voyages by combining cargoes and assigning vessels more efficiently, among other measures, even as K Line points out that while recovery was seen in some parts of the dry bulk market in the medium-sized and small vessel sector, “it will still take some time for improvement in the vessel supply-demand gap”.

Japan is a major coal importer for electricity generation, with buying totalling around 110m tonnes a year, or about 10% of total seaborne trade in that commodity. 

Beside the potential savings in combining dry bulk cargoes on these routes, the scale that the combination of NYK, MOL and K Line brings can give them stronger bargaining power in negotiating shipping rates with the producers as well as buyers of these raw materials. 

The dry bulk market is recovering, and the traditionally strong fourth quarter demand is putting a smile on the faces of market players currently. But it is a volatile market and in the longer term, scale and a strong balance sheet, with the help of robust cost control, will help operators ride downturns.