Japanese lines could quit South Africa as authorities block container merger 

Carrier reliability up in May

The surprise blocking of the merger of the container line businesses of NYK, Mitsui OSK Lines and K Line should not have a significant impact, according to analyst Alphaliner.

Last week the South African competition authorities rejected the merger by the Japanese companies to form the Ocean Network Express (ONE) with operations starting in April 2018, with the decision in part based on the line’s dominant position in the car carrier market where they have faced prosecutions for price fixing. According to Alphaliner only MOL and K Line call in South Africa with NYK having left the market in November 2015.

“The three Japanese carriers are expected to submit an appeal to the Competition Tribunal of South Africa on the decision as it could make a strong case that the merger would not result in a reduction in market competition given their limited market share in the South African container trade,” Alphaliner said in its weekly report.

Should an appeal fail, the Japanese lines could simply quit the South African market altogether with the market only accounting for 4% of their total global deployed capacity.

“The South African judgment is not expected to have a significant impact on the Japanese carriers’ plan to complete the timeline for setting up their container shipping joint venture before April 2018, as they could opt as a last resort to exit the South African market completely so that it would not affect the merger in other markets,” Alphaliner stated. 

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