Industry and business media report that Japan’s three largest maritime shipping companies are indicating they intend to merge their container shipping operations to create the what would probably be the sixth-largest global player.

This arrangement would involve Nippon Yusen K.K. (NYK Line), Mitsui O.S.K. and Kawasaki Kisen Kaisha Ltd.  Each has agreed to form joint venture that would that reportedly save a combined total of slightly over $1 billion annually in cost synergies. Under the plan, Nippon Yusen would hold a 38 percent stake in the joint venture while Mitsui and Kawasaki Kisen would each hold a 31 percent stake.  A published Bloomberg News report indicates the combined joint venture will have revenues of about 2 trillion yen ($19 billion) and will be Asia’s biggest box carrier after China Cosco Shipping Corplogistics_nanjin_port

The president of Kawasaki Kisen, told reporters in Tokyo Monday, that talks among the companies on the possibilities of merger began in the Spring.  The president of Nippon Yusen indicated in a news conference: “If we don’t want the number of Japanese shipping companies to be zero, we need to create one strong, splendid company.”

Plans call for the new joint venture company to be established in July 2017 and start operations by April 2018.

The combination will need the approval by regulators in the European Union, the United States, China and Japan among others.

Both Nippon Yusen and Kawasaki Kisen have been reporting significant financial losses during the past few quarters. Mitsui reduced its profitability forecast by nearly a half because of mounting operating costs.

This announcement comes on the heels of South Korea’s biggest line Hanjin Shipping Co. filing for receivership protection in August and its yet another indicator of the consolidation occurring in global container shipping amid upwards of 30 percent current and often idled excess capacity. Drewry Maritime Research predicts that the industry is on-track to record $5 billion in operating losses during 2016.

During the past two years, many of the top ocean container lines have pooled their combined ship capacity under various combined alliances while other geographic based regional has taken similar consolidation moves among them being the state-owned shipping lines within China.

According to the Shanghai Shipping Exchange, the spot price to move a 20-foot container from Asia to Europe was $958 at the end of last week, down 22 percent from $1,232 at the start of this year.