Based on existing fleet and orderbooks the combined Cosco-OOCL entity would become the world’s third largest container carrier, overtaking its partner in the Ocean Alliance, CMA CGM, according to expert analysis.
In an unprecedented style transaction, Hong Kong-based liner Orient Overseas International Ltd. (OOIL) was acquired by Chinese state-owned Cosco Shipping Holdings Ltd. (Cosco) and Shanghai International Port Group Co. (SIPG) for USD 6.3bn. The buyers said they will “keep the OOIL branding, retain its listed status and maintain the companies’ global headquarters in Hong Kong along with all management. Employees will retain the existing compensation and benefits, nor will any lose jobs as a result of the transaction for at least 24 months after the offer close,” reads an official press release.
The ‘bride’s’ dowry
London-based maritime consultancy firm Drewry has named OOCL –OOIL’s container unit- ‘The Perfect Bride’ due to its impecable track record. OOCL has an owned-fleet of 66 containerships aggregating approximately 440,000 teu. “It is a young and modern fleet with an average age of 7.1 years and average nominal capacity of 6,600 teu. It is introducing its first 21,000 teu vessel with five more to deliver and options for another six which it could easily exercise,” reads a report by Drewry.
As far as port operations go, OOIL/OOCL has interests in four terminals: 100% owned facilities in Long Beach in the US and Kaohsiung, Taiwan, and minority stakes (20%) in two Chinese terminals (Tianjin and Ningbo).
The synergy map
Operationally, fitting OOCL into the bigger company should not be too difficult as both OOCL and Cosco already belong to the Ocean Alliance (alongside CMA CGM and Evergreen) that operates mainly in the East-West container trades. OOCL is not a major player in the North-South tradelanes that fall outside of the scope of the carrier group.
The biggest impact will be felt in Intra-Asia, where both carriers already have a large presence, while the footprint in the Asia to Middle East trade will also rise significantly. Also, industry experts say that from a marketing perspective the acquisition of OOCL will enable Cosco to broaden its customer base, having previously being perceived, rightly or wrongly, as China-centric. OOCL’s reputation and history with global shippers will provide Cosco with an inroad to a wider selection of big Western shippers with volume.
Shippers are more less getting used to consolidation in the container industry, and with this acquisition shippers will be effectivley losing yet another carrier from the pool that increasingly resembles more of a puddle.
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