News and Press Releases

Notice of Agreement to the Integration of Container Shipping Businesses

October 31, 2016

Kawasaki Kisen Kaisha, Ltd.
Eizo Murakami, President & CEO

Mitsui O.S.K. Lines, Ltd.
Junichiro Ikeda, President & CEO

Nippon Yusen Kabushiki Kaisha
Tadaaki Naito, President

Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha have agreed, after the resolution by the board of directors of each company held today, and subject to regulatory approval from the authorities, to establish a new joint-venture company to integrate the container shipping businesses (including worldwide terminal operating businesses excluding Japan) of all three companies and to sign a business integration contract and a shareholders agreement.

  1. Background

    Although growing modestly, the container shipping industry has struggled in recent years due to a decline in the container growth rate and the rapid influx of newly built vessels. These two factors have contributed to an imbalance of supply and demand which has destabilized the industry and has created an environment that is adverse to container line profitability. In order to combat these factors, industry participants have sought to gain scale merit through mergers and acquisitions and consequently the structure of the industry is changing through consolidation. Under these circumstances, three companies have now decided to integrate their respective container shipping on an equal footing to ensure future stable, efficient and competitive business operations.

    The new joint-venture company is expected to create a synergy effect by utilizing the best practices of the three companies. And by taking advantage of scale merit of its vessel fleet totaling 1.4 million TEUs, realize integration effect of approximately 110 billion Japanese Yen annually and seek swiftly financial performance stabilization.

    By strengthening the global organization and enhancing the liner network, the new joint-venture company aims to provide higher quality and more competitive services in order to exceed our clients’ expectations.

  2. Overview of the new joint-venture company
    Item Outline
    Contribution Ratio
    Kawasaki Kisen Kaisha, Ltd. 31%
    Mitsui O.S.K. Lines, Ltd. 31%
    Nippon Yusen Kabushiki Kaisha 38%
    Amount of
    Approx. 300 Billion JPY
    (Including fleets, share of terminals as investment in kind)
    Business Domain Container Shipping Business
    (Including terminal operating business excluding Japan)
    Fleet Size Approx. 1.4 Million TEU*, 6th in the market with approx. 7% of global share
    Notes1) Figures are as of October, 2016 excluding order book
    Notes2) Source: Alphaliner

    *TEU: Twenty-foot Equivalent Unit

  3. Schedule

    Agreement date: October 31st, 2016
    Establishment of the new joint-venture company: July 1st, 2017 (planned)
    Business commencement: April 1st, 2018 (planned)

  4. Other

    The expected impact of the integration to business performance will be informed by each
    individual company once details have been confirmed.


Kawasaki Kisen Kaisha, Ltd.
Kiyoshi Tokonami, General Manager, Investor & Public
Relations Group
(TEL: +81-3- 3595-5189)

Mitsui O.S.K. Lines, Ltd.
Kayo Ichikawa, General Manager, Public Relations Office
(TEL: +81-3- 3587-7015)

Nippon Yusen Kabushiki Kaisha
Ushio Koiso, General Manager, Corporate Communication
and CSR Group
(TEL: +81-3-3284-5058)

This document includes information that constitutes "forward-looking statements" relating to the success and failure or the results of the integration of Kawasaki Kisen Kaisha Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushik Kaisha. To the extent that statements in this document do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the three companies in light of the information currently available to them, and involve known or unknown risks, uncertainties and other factors. Such factors may cause the actual results to be materially different from the contents of this document with respect to any future performance, achievements or financial position of one or all of the three companies (or the new company after the integration) expressed or implied by these forward-looking statements. Further, the three companies undertake no obligation to publicly update any forward-looking statements after the date of this document.

The risks, uncertainties and other factors referred to above include, but are not limited to:

  1. Procedural and practical difficulties accompanying implementation of the integration;
  2. Changes in supply and demand for the market, and changes in market position including changes in the competition environment and relationship with major customers;
  3. Changes in economic conditions in and outside Japan and changes in exchange rates;
  4. Possibility of misappropriation or deletion of personal data or confidential information due to IT failure, cyber-attack, or other reason;
  5. Occurrence of natural or man-made disaster which may have an adverse effect on the employees, offices, key facilities and IT systems of the new joint-venture company after the integration;
  6. Changes in laws and regulations relating to business activities;
  7. Delays in the review process by the relevant competition law authorities or the clearance of the relevant competition law authorities or other necessary approvals in relation to the integration being unable to be obtained; and
  8. Difficulty accompanying materialization of synergies or integration effects in the new joint-venture company after the integration.

Select here for a presentation including details from the Joint Press Conference on October 31, 2016.

Supplementary Documents
Q1: What factor(s) have driven the three Japanese Lines to integrate their container shipping business?
A1: The three companies have been cooperating in some products (service) through
vessel-sharing agreements and alliance scheme. Further they are similar in size, have
common corporate cultures, and believe the JV can leverage the strength of each individual
company to create stronger competitor overall.
Q2: What is the reason such a decision was made at this moment?
A2: Due to low oil-prices, sluggish cargo demand, and over-supply of trade capacity, container freight rates are at historic lows. Most container shipping companies are making a loss. The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually. Also, in order to keep a membership of a global alliance continuously, it would be necessary to have above a certain business scale level. Under such circumstances, we have decided to integrate our container shipping business so that we can continue to deliver stably high quality and customer focused products to the marketplace. Furthermore, the decision to cooperate in the East/West trades made in May 2016 by the creation of THE ALLIANCE was also a factor.
Q3: Does the integration mean the companies are quitting container shipping business?
A3: Container shipping will remain a core activity of all three companies. However the business
in this segment will be reshaped through consolidation into a new JV as an equity-method
Q4: What is the structure of the new company and how will capital be injected?
A4: The parent companies will inject cash and in-kind contribution of vessels and terminal
companies stocks into to the new JV in accordance with agreed share to establish an
operating company to manage container shipping and container terminal (excluding Japan)
business. The holding company will supervise the operating company as a shareholder.
Q5: How has the contribution ratio among three companies been decided?
A5: The ratio was decided and agreed after carefully evaluating each line’s the asset value,
profitability, and vessel fleet composition among other factors.
Q6: What do you expect to go through to get antitrust regulation’s clearance?
A6: It is mandatory to obtain approvals from the authorities and we will take the appropriate steps
to secure approval. Depending on the progress of the approval process, we may further
review the implementation schedule for establishing the new company.