Shinwa Kaiun, Nippon Steel Shipping to Merge

Japanese major bulk cargo shipping line, Shinwa Kaiun Kaisha and Nippon Steel’s raw materials transport subsidiary, Nippon Steel Shipping announced on Thursday they agreed to merge and signed the merger contract effective on October 1. They decided to merge for stronger business and financial base to survive in severe business condition under volatile bulk ocean freight market and challenges including potential oversupply and severer environmental regulation. They try to improve the efficiency and service through the synergy. The major shareholder of Nippon Steel announced the support and expectation for better competitiveness for the raw materials transport.

The two shipping lines merge into NS United Kaiun Kaisha after their shareholders’ approval in late June. Nippon Steel Shipping’s share holders receive 1.6 shares of Shinwa Kaiun Kaisha per a share of Nippon Steel Shipping. Shinwa Kaiun Kaisha is surviving company and the merged company will keep listing as Shinwa Kaiun Kaisha.

Nippon Steel holds largest share at 34.1% of the merged company when Nippon Steel has 15% share in Shinwa Kaiun Kaisha and 78.6% share in Nippon Steel Shipping. The new company represents around 40% of Nippon Steel’s raw materials carriers and 46% of Nippon Steel’s raw materials transport volume. Nippon Steel expects the merged company will contribute to the better efficiency for the transport.

Nippon Steel tries to improve the raw materials transport cost structure under the global player strategy. The firm expects the transport would be efficient with combination of iron ore transport from Brazil to Japan and coking coal transport from Australia to Usiminas of Brazil. Nippon Steel expects the merged company with larger fleet will contribute to such scheme.

Shinwa Kaiun Kaisha’s president Hiroshi Sugiura said at press conference on Thursday the merged company targets around 15 billion yen of recurring profit with around 150 billion yen of in 3 years with larger fleet including Shinwa Kaiun Kaisha’s 100 vessels, Nippon Steel Shipping’s 22 and ordered 30. Nippon Steel Shipping’s president Keiichiro Shimakawa, who will assume president of the new company, said the new company tries to follow growing demand along with contribution to Nippon Steel’s strategy.