Jeremy Nixon prepares for ONE launch
For Ocean Network Express (ONE) chief executive officer Jeremy Nixon, 1 April is a red-letter day. Not because it is Easter Sunday and certainly not because it is April Fool’s Day but because it marks the beginning of the combined container operation of NYK Line, “K” Line, and Mitsui OSK Line under his stewardship.
From its shiny new office in Singapore that is significantly larger than the ones previously occupied by the separate entities, the consolidation of the Japanese lines into a single brand is an exercise in standardisation, Nixon told Fairplay.
“It was very clear that we couldn’t look backwards and we had to create something new. There were more similarities than differences between the three legacy brands and the aim was to go straight to best practice.
“Once we’d agreed shareholding, equity valuation and the management systems, the location of offices, and got all the technical and difficult issues out of the way, it was down to implementation. This has been all about starting fresh. We had a clean piece of paper.”
From the choice of its name, which is “clean, clear, and signifies three companies coming together” to its determination to have “a single brand and a single face to customers”, Nixon has spared no effort in ensuring that the global carrier will play to the Japanese strength of being good at processes. This has involved drafting in consultancy teams to support business practice and developing system suites that can bring core systems together across 120 countries.
“Standardised end-to-end processes, systems, and organisation means we can slot things in quickly, but this also means that customers, regardless of their location, will have the same experience,” he added.
People remain the most important part of the integration, according to Nixon. “If you cannot win their hearts and minds, get them excited about the new business, or help them transition smoothly, then there will be risk aversion, so we have tried to make this transition easy,” he said, explaining that all ONE employees are being moved into new offices, issued new contracts, and will have the same start date to reinforce that this is a new venture.
“They need to know that there is now one clear vision and there is great excitement ahead of the April launch. It’s like the first day of school. A new start in a new environment.”
Nixon is no stranger to the effect of mergers, having previously encountered two in his career: when P&O merged with Nedlloyd in 1997, and then when P&O Nedlloyd was acquired by Maersk in 2005.
At the time of the second merger, Nixon was looking after P&O Nedlloyd’s Europe Trades business, and said the Danish company’s acquisition affected three groups of people. Those who did not want to work for Maersk, those who were not required, and those who “Maersk was keen to transfer and those that wanted to be transferred”. I fell into that latter category. I had been fighting against Maersk commercially all my career so I had a lot of respect for them. I was keen to work with them and find out what they were about.
“I also felt loyal to P&O Nedlloyd’s customers and I wanted to help bring them over and so I was very involved in the transition with my counterpart at Maersk,” he added. But then NYK Line came knocking at his door during the early part of the financial crisis, and with the liner trades going through a difficult period and Maersk downsizing, Nixon felt it was a good opportunity to leave.
With a decade-long tenure at Japanese shipping company, where he most recently headed up its liner business, did he expect the three Japanese companies would ever come together having witnessed so much consolidation firsthand?
“Before I joined NYK, I thought that if you could put Hapag-Lloyd and CP Ships together and P&O and Nedlloyd together, then why couldn’t you put the three Japanese lines together? Then I realised the significance of their structures. You have a company within a company within a very-large group company. Furthermore, the liner business is counter-cyclical to some of the other businesses within these groups. There’s a logic to why the divisions balance off each other and why the conglomerate model works well. There are also a lot of customer and geographic synergies across this too,” he explained.
“When people used to ask me if the three [lines] would ever come together, I would always begin with the premise ‘never say never’ but sometimes you need a crisis to force change.”
According to Nixon, that crisis in liner shipping occurred between 2015 and 2017 when there was “a complete meltdown of asset values, balance sheets, and pricing that destroyed a lot of value” and one had to decide if they were the “dinner or the diner”.
“We [the trio] quickly realised that we need scale and we needed something more sustainable. We had something very special with our Japanese customer-centric values. So if we were going to get larger, merge, or acquire, we needed to find like-minded companies.”
After months of negotiations, an alignment was reached between the three companies to merge their container operations and for each entity to hold a stake. The three have worked collectively and successfully for close to a year and alliance partners Hapag-Lloyd and Yang Ming have also lent their support, said Nixon.
For the former seafarer – the call of the sea and life on board initially held more attraction than a university degree for a young Nixon, who was raised on the south coast of England – the interplay between crew, ports, and the ships is vital and his career has enabled him to build an understanding of all three areas.
Following a four-year navigating officer cadetship with Andrew Weir where he worked on cargo ships, Nixon decided that it “wasn’t realistic to stay at sea all my life” and he headed to Cardiff University to read maritime law and economics and enjoy some rugby on the side. This led him to a management trainee position at the port of Felixstowe where he was persuaded and sponsored to embark on an MBA at Warwick University. While he was there, P&O Ports sold Felixstowe to Hutchison.
“On completion, I thought it was proper and correct that I went back to P&O and they thanked me for my honesty and asked me to join P&O Containers,” he said. “That is how I got from sea to ports and terminals, and then into containers.”
Having been exposed to the ups and downs of the container market for the better part of 30 years, Nixon could feel the urge to order more tonnage or perhaps follow in the footsteps of CMA CGM, Mediterranean Shipping Company and allegedly Hyundai Merchant Marine and order 20,000 teu box ships.
ONE has the world’s sixth-largest fleet, which according to Alphaliner data, grew by 8.7% in 2017 to a capacity of 1.48 million teu. This is being boosted further by the deliveries in 2018 of one 20,180 teu unit from MOL, four 14,020 teu vessels from NYK, and five 13,870 teu ships from “K” Line.
The carrier has invested in its information technology systems and has ordered 100,000 containers that will soon sport what is likely to be its unmissable magenta branding but it is “fine on capacity for the next 12 to 18 months,” Nixon told Fairplay.
“The 20,000 teu vessels offer good slot economics on the east–west trades, and we have done well on the cascading of tonnage on the intra-Asia, although some of those smaller Panamaxes will need to be replaced.”
Contact Nicola Good