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Japan's big 3 sea shippers, global rivals form alliance

TOKYO -- Japan's three leading marine transport companies and three other carriers worldwide will form the world's third-largest container shipping alliance, aiming to combat the slowing global economy's drag on earnings with higher efficiency.

Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen, along with South Korea's Hanjin Shipping, Germany's Hapag-Lloyd and Taiwan's Yang Ming Marine Transport, on Friday agreed to join forces. The companies together boast a fleet of around 620 vessels and container capacity of 3.5 million 20-foot equivalent units (TEUs) -- 18% of the global total.

Such factors as China's economic deceleration have shrunk loads of daily necessities, product components and other cargo, causing container shipping rates to plummet. Earnings at marine shippers continue to wither. Teaming up to cover various routes will help the new partners raise load ratios to ensure profitability, as well as avoid excessive competition.

Vessel-sharing on routes between Asia and the U.S., Europe and the Middle East is scheduled to begin in April 2017, pending approval by relevant authorities in each nation. The initial agreement will last five years. The three Japanese shippers will adjust their ports of call and operating schedules on duplicate routes.

The world's top and No. 2 container shippers, Denmark's A.P. Moller-Maersk and Switzerland's Mediterranean Shipping Company, are currently in an alliance that represents 27% of global fleet capacity. The Nos. 3 and 4 companies, France's CMA CGM and China Cosco Holdings affiliate Cosco Container Lines, in April formed a tie-up with two other shippers to control 24% of global capacity. These realignments had stirred interest as to how Japanese companies would respond.

(Nikkei)

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