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Japanese joint venture carrier ONE approaches launch date

June 30, 2017

Updated 7/5/2017

Ocean Network Express (ONE), the future name of the container divisions of Japan's three ocean shipping companies, is inching closer to operational status amid global antitrust reviews. The carriers plan to create a holding company in Japan and operational headquarters in Singapore.

K-Line, MOL and NYK had planned to operate ONE as a merged entity from July 1, 2017, prior to an actual merger date of April 1, 2018. However, several roadblocks have likely altered the plan, as the US Federal Maritime Commission (FMC) rejected on jurisdictional grounds an agreement among the Japanese carriers that would have allowed ONE to operate as a merged carrier before the official merger. The FMC ruled that it did not have the authority to review and approve the creation of a new entity. The Department of Justice and the Federal Trade Commission will now decide on the merger.

The merger is still expected to move forward without much opposition in the United States, as ONE is expected to account for only 7.2 percent of the global shipping capacity, according to the Journal of Commerce. However, the Shipping Act of 1984 prevents carriers from coordinating activities before a merger actually occurs. The unexpected result of the FMC decision may lead the carriers to move ahead with the ONE merger sooner than originally planned if it is not allowed to operate as a merged company prior to April 1, 2018.

The European Commission has approved the joint venture plan, concluding that ONE will have limited impact on European shipping lanes, and will operate in a highly competitive environment. Meanwhile, South Africa's Competition Commission rejected the merger plans on antitrust concerns. The commission determined that, given past collusion between ocean carriers, "the merger increases the likelihood of coordination as it creates further structural linkages in the container liner market." K-Line, MOL and NYK plan to appeal the decision, but have not ruled out exiting the South African market if they are unsuccessful.