Page 33: of Maritime Logistics Professional Magazine (Jul/Aug 2017)

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LINER TRADES

TEU- ranked number 3 on the world leaderboard (with ap- proximately 11.6% of world TEU capacity).

Olaf Merk, a European based observer of maritime econom- ics who publishes the highly regarded “Shipping Today” blog, noted via his Twitter feed that: “Market share of top 4 carriers after COSCO takeover of OOCL: 53.8%. The container ship- ping industry has ‘offcially’ become an oligopoly.”

A little more than a year earlier, Cosco had seen its size bolstered following an early 2016 hookup with China Ship- ping Container Lines. In the weeks prior to the Cosco / OOIL news, the trio of major Japanese container carriers, Nippon

Yusen Kaisha (NYK), Mitsui O.S.K. Lines (MOL) and Ka- wasaki Kisen Kaisha (K Line) fnalized their plans to merge their businesses into Ocean Network Express, or “ONE”- ef- fective in Spring, 2018. The merged entity’s capacity would be roughly 1.4 million TEU, putting it at number 6 on the carrier roster (with a share around 7%).

Other mergers in recent years include Hapag Lloyd’s ac- quisition of United Arab Shipping Company, in the works for two years and fnally completed in the Spring of 2017. Hapag

Lloyd, which controls 1.53 million TEUs, had previously bought CSAV in 2014 (in an unusual share exchange), and, in earlier round of company combinations, bought CP Ships, in 2004. Another major deal saw Singapore’s Neptune Orient

Lines (NOL), which had been largely owned by the govern- mentally linked Temasek Fund prior to being swallowed up in late 2015 by CMA CGM in a US $2.4 billion deal. CMA

CGM, controlled by the French businessman Jacques Saadé, ranks third (but will be usurped by Cosco- OOIL), controlling 2.3 million TEU (around 11% of the market).

More narrative surrounded yet another 2017 deal; Maersk’s acquisition of the German company Hamburg- Süd, for the equivalent of around US $4 billion. In explaining the ratio- nale, CEO Skou, said that the transaction: “… represents a time marketplace, suffers from the near-permanent bouts of unique opportunity to combine two complementary busi- oversupply that are endemic to the industry. But, in contrast to nesses and realize sizable operational synergies as well as drybulk and tanker sectors mired in doldrums, the liners (de- commercial opportunities. Combined, the two companies will fned as container carrying vessels on regular runs) have fought be able to realize operational synergies in the region of USD back through “consolidation,” which can take the form of com- 350-400 million annually over the frst couple of years…” He mercial alliances (typically taking the form of VSAs – “Vessel continued, adding, “The cost synergies will primarily be de-

Sharing Agreements”) or outright mergers between companies. rived from integrating and optimizing the networks as well

Lately, the mergers have been receiving all the headlines. as standardized procurement. In addition, APM Terminals’

In early July, the ongoing rumors of a deal between Cosco global portfolio will beneft from increased volumes.” Of

Shipping Lines and the listed company Orient Overseas Inter- particular importance in this merger was the terminal busi- national (OOIL, controlled by the C.Y. Tung family) quickly ness’s recent growth in South America, where Hamburg- Süd morphed into a deal announcement. Cosco, joined by Shang- remains very active. hai International Ports, is now on a path to purchasing OOIL In late August, APM took an important step towards sharp- (which controls Orient Overseas Container Line- OOCL) in a ening its shipping / logistics focus with the announcement of deal valued at US $6.3 billion. If the deal moves to fruition, a $7.5 Billion deal to sell its oil production unit, Maersk Oil, the entity would control a feet with capacity of 2.4 million to the French oil company Total. www.maritimelogisticsprofessional.com 33

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