ONE: The Rise of Ocean Network Express in the Shipping Industry

Introduction: A New Giant in the Shipping World

In the ever-evolving landscape of global shipping, a new player has emerged, making waves across the industry. On April 1st, 2018, the Ocean Network Express (ONE) officially began operations, marking a significant milestone in the maritime sector. This new entity is not just another shipping line; it's a powerful amalgamation of Japan's three largest shipping companies: Nippon Yusen Kaisha (NYK), Mitsui OSK Lines (MOL), and Kawasaki Kisen Kaisha (K Line).

The birth of ONE is a testament to the industry's response to challenging economic conditions and the need for strategic consolidation. In this article, we'll delve into the formation of ONE, its impact on the global shipping landscape, and how this merger reflects broader trends in the maritime industry. We'll also explore how Digital Logistics Platforms like FreightAmigo are positioned to support and complement these industry developments.

The Genesis of Ocean Network Express

The creation of ONE is not an isolated event but part of a larger trend of consolidation in the shipping industry. Following the bankruptcy of Hanjin Shipping, many companies in the sector have been looking for ways to stay competitive and financially stable in a challenging economic climate. The merger of NYK, MOL, and K Line is a strategic move designed to achieve several key objectives:

• Cost Reduction: ONE is expected to cut around $440 million in costs during its first fiscal year of operations.
• Increased Competitiveness: By combining resources, the new entity aims to compete more effectively with larger players in the industry.
• Operational Efficiency: The merger allows for the streamlining of operations and the elimination of redundancies across the three companies.

The groundwork for ONE was laid well in advance of its operational launch. The company was officially established on July 7, 2017, with bookings starting on February 1, 2018. The distinctive, brightly colored ONE containers began appearing at ports worldwide in mid-March, signaling the imminent start of the new shipping giant's operations.

ONE by the Numbers: A Formidable New Player

The merger of NYK, MOL, and K Line has resulted in the creation of a shipping powerhouse. Let's look at some key figures that illustrate the scale and potential of ONE:

• Market Position: ONE has become the world's sixth-largest containerline, with a global market share of 6.9% according to Alphaliner.
• Investment: The total investment from the three companies amounts to $3 billion, with NYK holding the largest share at 38%, while MOL and K Line each hold 31%.
• Fleet Size: ONE operates a combined fleet of approximately 230 vessels with a total capacity of 1,440,000 TEUs (Twenty-foot Equivalent Units).
• Global Reach: The new entity offers 85 service loops, calling at over 200 major ports across 100 countries.

These numbers represent a significant leap forward for the three Japanese companies. It's worth noting that prior to this merger, none of these companies individually ranked among the top ten container lines at the beginning of the decade. Their combined strength now puts them in a much more competitive position in the global market.

The Strategic Focus of ONE

While the merger brings together the container shipping operations of NYK, MOL, and K Line, including their respective terminal operations outside of Japan, the newly formed ONE has a clear strategic vision. Jeremy Nixon, CEO of ONE, has outlined the company's priorities:

1. Smooth Transition: The primary focus in the initial year is to ensure a seamless integration of the three companies' operations.
2. Value-Added Opportunities: ONE aims to identify and pursue opportunities that complement its existing setup over the next few years.
3. Differentiated Service Approach: Rather than directly competing with the top four shipping lines in terms of scale and market share, ONE intends to differentiate itself through its service offerings.
4. Yield Management and Innovation: The company plans to maintain a strong focus on yield management and innovation while ensuring a robust balance sheet.

This strategic approach demonstrates ONE's understanding of the challenges and opportunities in the current shipping landscape. By focusing on differentiation and value-added services, ONE aims to carve out a unique position in the market rather than engaging in a potentially destructive race for market share.

Challenges and Opportunities

While the formation of ONE presents numerous opportunities, it also comes with its share of challenges. The merger of three distinct corporate cultures into a single entity is a complex process that requires careful management. Klaus Lysdal, Vice President of Sales and Operations at iContainers, highlights some of these challenges:

• Cultural Integration: Merging three company cultures into one will inevitably lead to changes in values and operational approaches.
• Client Relationships: Some clients who were accustomed to working with a particular carrier may find the transition challenging as their contacts and ways of working change.
• Service Approach: The new company will need to decide on its overall approach to customer service and the type of experience it wants to offer its clients.

However, these challenges also present opportunities for innovation and improvement. By carefully selecting the best practices from each of the three companies, ONE has the potential to create a more efficient and customer-centric organization.

The Role of Digital Logistics Platforms in the New Shipping Landscape

As the shipping industry continues to evolve with mergers like ONE, the role of Digital Logistics Platforms becomes increasingly important. These platforms, such as FreightAmigo, can provide valuable support to both shipping lines and their customers in navigating the changing landscape.

FreightAmigo, as a full-service, one-stop Digital Logistics Platform, is well-positioned to help clients adapt to these industry developments. Here's how FreightAmigo's solutions can address the challenges and opportunities presented by consolidations like ONE:

1. Simplified Booking Process: With the merger of three major shipping lines, clients may face a more complex booking landscape. FreightAmigo's platform allows users to compare door-to-door freight quotes for various shipping methods, including sea freight, and book online, simplifying the process regardless of carrier consolidations.
2. Enhanced Visibility: As shipping operations become more complex, tracking shipments can be challenging. FreightAmigo's ability to track shipment status anytime, anywhere, connecting with more than 1000 reputable airlines and shipping lines, ensures clients maintain visibility over their cargo regardless of carrier changes.
3. Streamlined Documentation: Mergers often lead to changes in documentation requirements. FreightAmigo's automated shipment document feature can help clients navigate these changes more easily, ensuring compliance with new procedures.
4. Comprehensive Support: The 24/7 logistics expert support offered by FreightAmigo can be particularly valuable during times of industry change, providing clients with guidance and assistance as they adapt to new shipping realities.
5. Integrated Services: FreightAmigo's ability to arrange customs clearance, cargo insurance, and trade finance in one stop can help mitigate some of the complexities that may arise from carrier consolidations.

By leveraging these features, FreightAmigo can help freight forwarders and shippers navigate the evolving shipping landscape more effectively, turning potential challenges into opportunities for improved efficiency and service.

The Future of Shipping: Consolidation and Digital Transformation

The formation of ONE is a clear indicator of the direction the shipping industry is taking. Consolidation is likely to continue as companies seek to achieve economies of scale and improve their competitive position. At the same time, the industry is undergoing a digital transformation, with Digital Logistics Platforms playing an increasingly crucial role.

As these trends continue, we can expect to see:

• Further mergers and acquisitions in the shipping industry
• Increased focus on digital solutions to improve efficiency and customer service
• Greater integration between shipping lines and Digital Logistics Platforms
• More emphasis on value-added services and differentiation
• Continued efforts to reduce costs and improve sustainability in shipping operations

In this evolving landscape, Digital Logistics Platforms like FreightAmigo will be essential in helping both shipping lines and their customers navigate the changes and take advantage of new opportunities.

Conclusion: Embracing Change in the Shipping Industry

The launch of Ocean Network Express marks a significant milestone in the shipping industry. It represents not just the merger of three major Japanese shipping lines, but a broader trend towards consolidation and digital transformation in the maritime sector.

While the formation of ONE brings both challenges and opportunities, it's clear that the shipping industry is moving towards a future of larger, more integrated players and increased reliance on digital solutions. In this context, Digital Logistics Platforms like FreightAmigo play a crucial role in bridging the gap between traditional shipping operations and the digital future of logistics.

As we watch ONE's progress and await its operational and financial results, one thing is certain: the shipping industry is changing, and those who can adapt quickly and leverage digital solutions will be best positioned for success in this new era of global trade.

We at FreightAmigo are committed to supporting our clients through these industry changes, providing the digital tools and expertise needed to thrive in this evolving landscape. Whether you're a freight forwarder adapting to new carrier relationships or a shipper seeking to optimize your logistics operations, our Digital Logistics Platform is here to help you navigate the waves of change in the shipping industry.