As the container shipping lines try to talk up some very disappointing, if expected, results for the third quarter of 2011 everyone in the market is reviewing their options for the future. With all the big lines struggling to turn any sort of profit the fact that there is oversupply in the industry leaves all the players with poor hands when it comes to their own salvation.

As with the economic cycle of a country the wheel revolves slowly for the bigger freight carriers but eventually it must come to a halt for one or more of them. The woes of French giants like CMA CGM have been well documented but focus in the past few weeks has centred on the Asian owned groups like Mitsui OSK Lines (MOL) whose senior executives, including both the Head of Finance and President Koichi Muto, have indicated recently that they have not ruled out a merger with one or more other Japanese box carriers.

The situation for the Japanese is particularly grim having faced not only the downturn in trade over the past couple of years but the nightmare of the earthquake and subsequent tsunami and now the disastrous Thai floods. The Japanese are notoriously patriotic in their selection of logistics suppliers and the disasters at home caused disruption to many shippers and others in the supply chain. Now, with Thailand supplying the raw materials for many Japanese manufacturing companies, including the automotive, computer and electronic trades, the situation there has ceased production for many with no clear indication as yet when normality will return.

Another factor has been the weakness of other currencies against the yen and the Japanese may well believe a co-operation is necessary to match the scope of the European operations which currently handle around half of the Asia/Europe box trade. Whilst Swiss managed MSC and Danish giant Maersk have the size and resources to await better times the Japanese could presumably benefit from the economy of scale a joint venture would bring. There would however likely be problems as this would inevitably involve the usual pooling of resources and consequent redundancies.