Mitsui OSK Lines Shows Capabilities in “3J” Merger

Mitsui OSK Lines Shows Capabilities in “3J” Merger

Japanese leaders Nippon Yusen Kaisha (NYK), Mitsui OSK Lines (MOL) and K Line have accomplished the initial stage in the approval of their acquisition. If it gets fully approved, the new partnership would handle one of the world’s largest container fleet, which can carry 7% of worldwide capacity.  MOL is preparing to rebuild itself; and the restructuring involves the use of ultra-large vessel as it creates the path for “3J” operation.

MOL’s super-ship Triumph – the world’s biggest container ship – just made its first appearance and will ply THE Alliance’s Asia to Europe trade via the FE2 service.

The launch of the 20,150 TEU MOL Triumph – the first super container ship to break the 20,000 TEU barrier – was just one of the 20,150 TEU vessels being built currently for MOL.

The launch of these super ships will further create impact on a market trying to prevent overcapacity issues. While it has been reported in different locations that demand is steadily increasing, the release of these ULCs will indeed create positive results in the future. However, cargo back office operators feel cautious that launching large capacity may depress rates and have a detrimental financial impact on the shipping giant’s container business, and maybe for the upcoming merger. As always, it is too early to predict in such a shaky market.

The Restructuring of Mitsui OSK Lines

Starting April 2017, MOL’s new organizational structure will include:

  • The Product Transport Business Unit in which majority of its carrier and port divisions will be located.
  • Back office offshoring services that will buy and distribute bunker oil and lubricant, establish mid-and long-term regulations to purchase fuels and create faster initiatives with regards to ships that use alternative fuel like LNG.
  • To build a New Business Creation Division for research and development initiatives that are not part of mainstream business.

The Focus on India

Aside from what was mentioned above, the company appears to be focusing on the Indian Subcontinent as a big opportunity. MOL passed a resolution to the Indian government to build a branch in the country. If this is approved, the MOL wing will handle the logistics business from Mitsui O.S. K. Lines (India) Pvt. Ltd., starting the 2nd quarter of 2017, and will handle operations in areas such as Delhi, Mumbai, Chennai, Ahmadabad, Bangalore and Pune.

MOL mentioned that the new branch will be able to deliver air and ocean cargo shipping, cross-border shipping to nearby countries, domestic transportation, provide storage, handle customs clearance, and plant and project cargo transport tasks.

Introducing the Cargo Project

In addition to the company’s restructuring and its current expansion plans in India, MOL is planning to grow its project and heavy cargo activities in Asia and Europe to “improve its vision on inter-modal transport services for very large cargoes,” MOL stated.

Indeed, MOL envisions to distribute activities between its four MOL subsidiaries, also called the “MOL Banner.”

Diversification is an intelligent strategy that will provide not only new chances for growth, but also the expansion of services. This, in turn, will decrease MOL’s possibility to be affected by the struggling container industry.