Shake Up in Chinese Maritime With Major Merger and Potential Partnerships

A major shake up is anticipated for Chinese shipping with the announcement of a merger between two of the mainland’s largest carriers. China Cosco Shipping Corporation (CCSC) was officially launched in Shanghai this week, a merger of China Cosco and China Shipping Container Lines. The combined fleet will compromise 832 vessels, almost three times those owned by Maersk Line and almost double their value at $21.9 billion.

Beijing was the driving force behind the merger of China’s two biggest shipping lines, trying to streamline and improve the efficiency of the giant state-owned entities as the country moves into a period of slowing exports and increasing domestic consumption. The merger involves a complex set of asset swaps worth more than $9 billion and financial restructuring that will see some units undergoing a complete metamorphosis of their operations. China Shipping Container Lines, for instance, will cease to be a container carrier and become a ship leasing and finance company. Besides CCSC, China Cosco will be pursuing a partnership with CMA CGM that may further test and restructure the east-west alliances.

China Cosco and CMA CGM are leading efforts to set up a new carrier partnership that may yet include Hong Kong’s Orient Overseas Container Line (OOCL), reports Paris-based Alphaliner. OOCL is understood to be reviewing its options after a high-level meeting with CMA CGM and Cosco in late January, said the Paris-based research house. The plan is to include OOCL and Taiwan’s Evergreen that may well split up three of today’s four main east-west alliances and leave Ocean Three, CKYHE and G6 alliances in tatters. CMA CGM now is a partner with CSCL and United Arab Shipping Co. in the Ocean Three Alliance. Cosco is part of the CKYHE Alliance, along with “K” Line, Yang Ming, Hanjin and Evergreen. APL and OOCL are in the G6 along with Hapag-Lloyd, Hyundai, NYK and MOL.

CMA CGM already stated that it will pull APL out of the G6, once it takes over Singapore’s APL in the second half of the year. The Marseilles-based carrier has also expressed the hope that the merged Cosco-CSCL will join the Marseilles-based carrier in a new alliance partnership. But Cosco has yet to reveal any post-merger alliance plans to follow its acquisition of CSCL’s container shipping operations, due to be finalised by the end of February. Meanwhile, Evergreen is in a mourning for its late founder Chang Yung-Fa and is not expected to make any announcements until the month-long silent period is over. Stay tuned as more information becomes available on the CMA CGM, CCSC, OOCL, and Taiwan Evergreen partnership.