Nippon Yusen, Mitsui OSK, Kawasaki to merge container shipping ops

TOKYO (Reuters) - Japanese shippers Nippon Yusen KK, Mitsui OSK Lines Ltd and Kawasaki Kisen Kaisha Ltd said on Monday they will merge container shipping operations as overcapacity and weak economic growth shake up the global industry.

The companies said they would form a joint venture that they expect would see annual cost benefits of about 110 billion yen ($1.05 billion) from the integration.

Shares in the companies - whose combined fleet of over 2,000 vessels includes tankers, dry-cargo carriers and container ships - jumped almost 10 percent after news that their presidents would hold a news conference at 0200 GMT.

Overcapacity and anaemic economic growth globally has left hundreds of ships idle in the industry's worst downturn since its origins in the 1950s and 1960s, causing the collapse in August of South Korea's Hanjin Shipping Co Ltd, then the world's seventh-largest container shipper. Analysts expect capacity to worsen at least over the next three years.

Container shipping has seen a wave of mergers and acquisitions, particularly in Asia, as companies try to grab a bigger share of a depressed market.

The Japanese joint venture, to be owned 38 percent by Nippon Yusen and 31 percent each by Mitsui OSK and Kawasaki Kisen, will be formed on July 1, 2017 and begin operations in April 2018, they said in a joint statement.

Shares of Nippon Yusen rose as much as 9.9 percent, Mitsui OSK by 9.2 percent and Kawasaki Kisen as much as 8.5 percent.

The three firms are due to report their earnings on Monday as yen strength threatens to widen their annual loss forecasts.

($1 = 104.7600 yen)

(Reporting by Tim Kelly and Taiga Uranaka; Editing by Kenneth Maxwell and Stephen Coates)