LX Pantos Co., South Korea’s largest logistics company under LX International Corp., has advanced into the US intermodal logistics market jointly with Ocean Network Express (ONE), Japan’s largest container shipper.
The Korean logistics firm announced on Tuesday that it and ONE have set up a 51-49 joint venture called Boxlinks, marking a Korean logistics firm’s first JV with a major global shipping company in North America.
ONE is Japan’s largest container shipping company founded in 2017 through the consolidation of the country’s top three ocean carriers’ container business.
It is also the world’s sixth-largest container shipper with a fleet size of more than 1.9 million twenty-foot equivalent units (TEUs) and a fleet of over 240 vessels.
The two partners undisclosed their financial terms for the JV.
With Boxlinks, LX Pantos and ONE will enter the intermodal logistics market in the US, which is poised to grow rapidly.
Intermodal freight refers to goods transported in a container by different transportation modes, including container ships, trucks and trains.
Because intermodal logistics service uses the same container for the freight when transferred between modes of transportation, it significantly reduces the amount of cargo handling and costs.
Thanks to such cost and environmental advantages, the US intermodal logistics market is forecast to grow at a compound annual growth rate of 10.9% through 2030 from the current market value of $59 billion, according to the Intermodal Association of North America (IANA).
“This joint venture will serve as a strategic foothold for our penetration into the U.S., the world’s largest logistics market,” Lee Yong-ho, chief executive officer of LX Pantos, said in a statement.
“We are committed to advancing our end-to-end logistics services by integrating international shipping with inland rail services, further strengthening our market position.”
NEW REVENUE STREAM
The US JV with ONE is expected to create a new revenue source for LX Pantos grappling with falling sales in its mainstay businesses in recent years.
As the world’s largest consumer market, the US heavily relies on imports mainly shipped in container cargo.
But most containers transported inland from the major ports in Los Angeles, Savannah and New York return empty to the ports due to limited export cargo.
LX Panto and ONE will use those empty containers to unlock new opportunities in intermodal logistics services through the JV by combining rail and truck transportation.
Boxlinks will hold rights to manage ONE’s inland-to-coastal domestic transport needs through a Domestic Reposition Program (DRP), said LX Pantos.
The LX Pantos-ONE JV has already agreed with major US rail operators, including Union Pacific Railroad (UP), Norfolk Southern (NS) and BNSF Railway, to support seamless operation of its intermodal cargo services in the country.
Under the agreements, the JV is expected to build an extensive rail network connecting key logistics hubs in the US and secure competitive freight rates.
LX Pantos offers comprehensive logistics services, operating based on 380 networks across the globe. Korea’s No. 1 logistic company is one of the world’s top seven sea freight forwarders, according to the company.
By Jung-Eun Shin
newyearis@hankyung.com
Sookyung Seo edited this article.
