We are only a few short months out from witnessing the birth of a new major global container shipping line. This new startup will be comprised of Japan’s three largest ocean carriers; MOL, “K” Line, and NYK. Combining their container business and terminals, the three will soon become one with a new joint venture aptly named Ocean Network Express (ONE).
However, taking three major container lines that were former competitors and combining them together isn’t exactly a simple process. It’s important to have a steady hand at the helm to guide the new company through the challenges that they will face, and Mr. Jeremy Nixon was selected to be the new CEO of ONE Line to see them through the merger ahead. We had the opportunity to sit down with him as he explained to us further the background behind the new liner, what he sees for the future of their group, and most importantly the advantages that he believes they will be able to offer customers.
Consolidation and mergers in the container shipping industry are common now due to overcapacity in the marketplace. In order to compete and survive, ocean lines are finding that mergers allow them to achieve economies of scale; improving their coverage and increasing frequencies. Mergers also aid in taking away some of the uncertainty from the supply chain, and means that the players involved are stronger and better ability to ride out the economic shocks that they experience in global trade.
The three long-standing Japanese carriers came to this same conclusion, and decided that merging was the path forward. According to the latest data from Alphaliner.com, the newly formed ONE Line’s fleet size will encompass 1.4 million TEUs, placing them sixth in the market in terms of size with a 7% global market share.
Numbers aside, an endeavor of this size is no small feat and as Mr. Nixon explained, “I think that many people originally thought that combining three companies would be very difficult, and often asked, would it be possible to put three huge Japanese companies together? However, the writing was on the wall; we either win together or lose alone. Once we had made the decision that we wanted and needed to do it, and cleared up some of the shareholding issues between three partners, the attention, focus, and consensus has been very positive.
He continued, “We’re not merging ‘this’ company with ‘that’ company; no, we’re creating a whole new company called ONE. It’s a new start, and we will bring the people and assets across from the previous line and we will operate as one company, with one set of systems and one management team from April. We will respect the previous companies, but this is a new start. It doesn’t matter how long you worked at the previous companies before, we’ll all be starting out together on day one on a journey to create a new shipping line.”
“To look forward sometimes you have to look back,” Mr. Nixon said. “You must learn from previous experiences to make sure the future execution will be a positive experience. Personally, I went through two major integrations with P&O and Nedlloyd and then the Maersk takeover. I think there were learning aspects to all of that. The key part being that the we are servants of the trade and the customer hasn’t volunteered for there to be a consolidation. So, we must make sure this is as smooth as possible, to make sure customers’ supply chains and businesses aren’t affected adversely. Our team at the global, regional, and country level are really focused on this. We’re putting a lot of time and energy into planning and making sure that for each particular project we are aware of requirements and ensuring we on track. That’s a key part of it, we’ve got capable people, a good plan, and we’re very focused on executing the plan well.”
He continued, “While we need to be sufficiently big enough to survive, we aim to be agile enough to respond to our customers’ needs quickly. We’re after all in the service business and customer experience is of the utmost importance for our group. While this is a new company with a new philosophy, we still wanted to retain that very customer centric process excellence style of working. The previous three Japanese companies have a long history of dedicated service for customers that we hold in the highest regards and look to continue as a pillar to our service going forward.”
ONE Line is also taking the step of moving the operating company out of Japan, and moving it to a new global headquarters in the Marina Bay business district in Singapore. This follows suit of what many other companies with similar strategies have done, by moving their home base operations to places like Hong Kong or Singapore, but it’s something that Japanese companies have been more resistant to until now. As the previous CEO of NYK, Mr. Nixon’s experiences in Japan have allowed him to see how the attitudes are changing.
He said, “Over the last 20 years’ Japanese companies have been doing more and more business outside of Japan. As we know in the liner business, a lot of the services went and left Japan, but the Japanese clients have also moved a lot of their sourcing and production, and their consumer market has moved offshore as well. Historically, as Japanese companies followed customers into those sectors, it meant they were growing together in building global organizations and led them to having a global footprint. It’s more of a question now of transitioning from being a Japanese company that happened to be international, to an international company that happens to be Japanese. We’re on that journey and I think having that global head office here in Singapore is a further step in truly making us an international company.”
“It’s more of a question now of transitioning from being a Japanese company that happened to be international, to an international company that happens to be Japanese.”
To compete against increasingly fierce competition on the global stage, the new ONE Line is stressing their international long-haul connections to Europe and North America are still strong thanks in part to the backing of the network within The Alliance. As Japanese container lines have traditionally been very strong in intra-Asian routes and the Pacific, this is an area that ONE Line looks to continue to stay very close to in order to maintain close relationships with their customers. The ability to offer more point-to-point services, with more frequency, to more destinations across ASEAN and intra-Asia will be a key differentiator for the burgeoning new ocean line.
Mr. Nixon went onto explain how Thailand fits into the puzzle and how a big focus will be placed on the country. “All three of the Japanese companies have historically been big players in the Thai market, and we have every intention of continuing that. Our long-established relationships and experiences in the country give us extremely solid footing that we look to only improve upon. We have a lot of responsibility to ensure that we maintain our strong coverage and integrate those into our new company. We hope to be able to maintain our very high focus on customer service and combine that with our strong network of products. With the backing of The Alliance’s network, we will maintain our Laem Chabang direct calls to Europe and US East Cost, US PNW, US PSW, as well as bringing together the previous strengths of the three Japanese carriers had particularly on the intra-Asia and ASEAN area. We look to have a very strong offering for next year, and we very much look forward to working with our Thai colleagues and customers to make sure we have very good offerings for the Thai market.”
Stepping back and looking at the larger picture, what will truly determine whether this new company is successful or not is ultimately up to the customer, as Mr. Nixon explained, “There is a determination I’ve seen throughout our team and we are very dedicated to launching this company successfully. Ultimately though it’s the customer who decides if they will support us or not. If we can do a good job and gain their trust and confidence that will serve us better long term. It’s a sign of how we want to develop the company into the future, but we have to walk before we can run. The next six months is all about making sure we have a smooth transfer of the business across the board. Our end goal is to have a very good reputation for our customer service, our services and products in the future, which our clients can rely on Ocean Network Express to deliver on.”