Merger will strengthen Japan's shipping sector

Subject

Developments in the Japanese shipping industry and the international shipping market.

Significance

Three of Japan’s largest shipping lines -- Nippon Yusen Kaisha, Mitsui OSK and Kawasaki Kisen Kaisha -- plan to consolidate their operations in July 2017 to save an estimated 1 billion dollars per year. The three lines combined will control an estimated 7% of the global market, and expand their share of the increasingly critical trans-Pacific market, which has realigned significantly in response to the bankruptcy of South Korean shipping firm Hanjin in August.

Impacts

• This major consolidation may prompt other carriers in other states to follow suit.
• Powerful new opposition to free trade agreements in major economies will lead to previously unexpected trade contractions.
• Retail prices for goods imported from East Asia will likely rise.