Introduction To the O.N.E. Ocean Network

Ashley Boroski MendozaGeneral, News, Ocean Freight, Shipping GuideLeave a Comment

Cargo ships entering to the port

One of the hottest pieces of news in the shipping industry is that three Japanese carriers have joined forces. They are now part of O.N.E. (Ocean Express Network). The network was officially established on April 1st, 2018. The members of this group include:

  1. Kawasaki Kisen Kaisha Ltd (“K” Line)
  2. Mitsui O.S.K. Lines, Ltd (MOL)
  3. Nippon Yusen Kabushiki Kaisha (NYK)

O.N.E. has focused on being competitive by providing their customers with the best quality services on the market today. Through consolidation, the three companies seek to learn from one another while continuing to strengthen their mutual operations.

Key Competitive Advantages Envisaged by the Merger

All members of O.N.E. will benefit from world-class structures and practices. The new organization has a combined fleet size of 1,440,000 TEU as well as 85 service loops. O.N.E. will use this capacity to reach more than 200 ports across the globe. The new group comes at a time when the shipping industry has focused its efforts on amalgamation as a strategy for overcoming some of the challenges that have been facing the sector over the last few years.

History of the Organization

O.N.E. was founded on July 7, 2017 when the first schedule was released. The company has its headquarters in Singapore and Tokyo. Currently, O.N.E. is the 6th largest operator in the shipping industry. The various partners have the following stakes:

  • Nippon Yusen Kaisha (38%)
  • Mitsui O.S.K. Lines (31%)
  • K Line (31%)

O.N.E. has established itself as a truly international brand with branches in London (UK), Richmond (USA), Sao Paulo (Brazil) and Hong Kong. According to the new CEO Jeremy Nixon, O.N.E. will have 240 container vessels, including 31 extra-large ships in the Ultra Large Class which have an individual capacity of 20,000 TEU. The company will establish offices in 90 countries.

According to Nixon, “ONE does not aspire to be the largest carrier in the market, just large enough to survive and yet small enough to care…to be a global company that happens to be Japanese, rather than a Japanese company that happens to be global.”

Company Profile and Activities

O.N.E has adopted the mantra that all routes lean to ONE. This ethos reflects the mutuality and collaboration of the various parties that comprise O.N.E. The partners share the Japanese culture but each brings to the table a range of different strategies. They have the advantage of having operated in different geographical areas so that they can bring together all of their experiences.

O.N.E. has gone out of its way to be a unique collaboration, starting with its brand color which is a cherry blossom magenta hue. The cherry blossom tree is a symbol of Spring in Japan. The use of this symbol dates back to the days of Aristotle Onassis, the legendary Greek shipping magnate. This is in keeping with the grand ambitions of O.N.E. and its enormous operational capacity.

Positioning within the Shipping Industry

O.N.E. is keeping in touch with the tradition of alliances in the shipping industry. For example, it is an acknowledged partner in the Alliance. This is a consortium that includes Yang Ming Marine Transport Corporation and Hapag Lloyd. With its 34 services, O.N.E. promises to offer a wide range of products for their old and new clients.

The trip distribution over the initial 81 ports is as follows:

  1. 19 in Asia Far East (7 in China and 5 in Japan)
  2. 3 in the Indian subcontinent
  3. 7 in the Middle East and the Red Sea
  4. 24 in Europe (7 in North Continent 14 in the Mediterranean Sea)
  5. 21 in US and Canada
  6. 7 in Central America and the Caribbean

The network will be linked together using a complex transshipment system that includes over 250 ships. The services that are offered include loops, shuttles, pendulums, and dedicated trades. The partners have added to their original tonnage with an ultra large vessel and 12 large ones that can offer a capacity of up to 14,000 TEU each. O.N.E. intends to have a full fleet review within 18 months to assess whether further investments are necessary.  

Strengths and Weaknesses

The biggest strength is volume, but volume can also become a weakness if not controlled. There will be pressure to change systems and amalgamate them. It remains to be seen whether O.N.E. will be able to cope with this large capacity. Moreover, there could be internal conflicts about precedents and controls. These will manifest in the next few months without direction from the management team.  

Some analysts might question the decision to do so much and so quickly. Although these are all Japanese companies, they have their individual quirks which mean that amalgamating them might not be as easy as writing up a contract. There is a lot at stake and the players are not going to be disinterested parties when the operations are being negotiated. That means that there is still plenty of room for disagreement and conflict.

Opportunities and Threats

This is the age of large shipping alliances so O.N.E. is definitely on the right track. As the 6th largest operator in the industry, it can rest easy knowing that there are few predators out to get it. The downside is that there are still five larger shipping groups to compete with. That means that O.N.E. will continuously have to upgrade and improve its systems in order to compete effectively.

It must also be noted that the shipping industry has not had the best two years so there are structural issues that might yet derail all the wonderful plans that O.N.E. has. The upside is that the executive team seems to be well aware of the pitfalls and is taking concrete steps to mitigate them. This is as good a solution as any to the uncertainty and cutthroat competition within the shipping industry today.

As one of the more recent players in the shipping industry, O.N.E. has a lot to prove. So far the organization has shown that it has the drive and expertise to come up with something unique. Their focus on customers is admirable because, in the midst of all these mergers, it is possible to forget why these large companies engage in the shipping industry.

The new CEO seems to be on script in terms of communicating the vision for the shipping industry. The real challenge will be how O.N.E. survives and prospers (or even flounders) in this highly competitive industry that is dominated by giants.

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Ashley Boroski Mendoza
Ashley has worked in the George W. Bush Presidential Administration in both the White House and DHS. She later worked as a policy advisor in the Senate and representing top retailers to the federal government at the premier retail trade association. Currently, she is the Head of Business Development at ShipLilly ensuring exceeded growth annually.

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