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Cosco Shipping – a guide to the merger of Cosco and China Shipping

In a year of consolidation the biggest and most complex was the merger of Chinese shipping giants Cosco and China Shipping. The deal spanned almost every aspect of the shipping and maritime industries including dry bulk, containers, tankers, LNG, shipyards, ports, specialised vessels, leasing and finance, insurance, and shipping services.

With the raft of merged subsidiaries with new names and businesses across the group Seatrade Maritime News has put together an all in one place guide to the main businesses of Cosco Shipping.

Cosco Shipping

Considered one of the most complicated deals in the history of China’s capital market, China Cosco Shipping Corporation Limited (Cosco Shipping) was formed last year following a RMB60bn ($8.7bn) merger plan involving 74 transactions between two biggest state-owned shipping conglomerates.

Shanghai-headquartered Cosco Shipping, a merger of China Ocean Shipping (Group) Company (Cosco) and China Shipping (Group) Company (CSG), was officially launched in February 2016 after Beijing approved the merger in December 2015.

Due to the complex organisational structures of the two shipping groups, the consolidation and restructuring of the merged entity have been ongoing after the official launch. Today, several core subsidiaries have been carved out to manage different business aspects for the enlarged group. And unsurprisingly all the subsidiaries now carry a harmonised branding of including the words ‘Cosco Shipping’.

The rebranded, restructured subsidiaries and their business functions are as below – for more details on each company click on the name.

1) Cosco Shipping Lines (renamed from Cosco Container Lines Co or Coscon) – containerships owner and operator assimilating the boxship fleet from both COSCO and CSG

2) Cosco Shipping Bulk (new entity) – dry bulk carriers owner and operator formed from the merger of Cosco Bulk Carrier Co and China Shipping Bulk Carrier Co

3) Cosco Shipping Energy Transportation (renamed from China Shipping Development Co or CSDC) – LNG and oil tankers owner and operator

4) Cosco Shipping Specialised Carriers (renamed from Cosco Shipping Company Limited or Coscol) – specialised vessels owner and operator

5) Cosco Shipping Ports Limited (renamed from Cosco Pacific) – ports and terminals operator

6) Cosco Shipping Holdings (renamed from China Cosco Holdings Company Limited) – container shipping and terminal services

7) Cosco Shipping International (Hong Kong) Co (renamed from Cosco International Holdings Limited) – integrated shipping services provider

8) Cosco Shipping Financial Holding (new entity) – financial services such as ship leasing, investment, insurance, finance management

9) Cosco Shipping Development (renamed from China Shipping Container Lines or CSCL) – leasing businesses and ship financing

10) Cosco Shipping (South East Asia) Pte Ltd (new entity) – manage the group’s companies in the region

11) Cosco Shipping Heavy Industry (new entity) – shipbuilder formed from the merger of Cosco Shipyard, Cosco Shipbuilding Industry Company and China Shipping Industry Co

12) Cosco Shipping Captive Insurance (new entity) - provides various insurance services for all the affiliates of Cosco Shipping

13) Cosco Shipping Logistics (new entity) - provider of integrated supply chain logistics services

14) Cosco Shipping – The group as a whole combining all of Cosco and CSG

 

CCS Linesosco Shipping Lines is a core business of the group, taking on the containership fleet of Coscon and CSCL. With a carrying capacity of some 1.58m teu, Cosco Shipping Lines is now the world’s fourth biggest carrier taking up approximately 7.5% market share, behind Maersk Line, Mediterranean Shipping Company (MSC) and CMA CGM. Cosco Shipping has unveiled a plan to expand the fleet of Cosco Shipping Lines to 2m teu by end-2018, and focus on services on the major trade lanes of Asia-Europe and Asia-America. The name first made its appearance in the form of the vessel name Cosco Shipping Panama which made the inaugural transit of the expanded Panama Canal on 26 June 2016 – a short video of which can be seen below.

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 CS BulkCosco Shipping Bulk is undoubtedly the world’s largest bulk fleet owner after combining the assets of China Cosco Bulk Shipping (Group) Co and China Shipping Bulk Carrier Co, creating a company with 382 bulkers with a total capacity of 34.58m dwt. But becoming big may not be a strategic way amid the weak bulk shipping market, pointing to Cosco Shipping Bulk’s fleet streamlining plan of losing some 2.89m dwt of vessel capacity by end-2018.

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 CS Energy TransportationCosco Shipping Energy Transportation boasts an oil tanker fleet of around 120 vessels totalling 17.85m dwt. Formerly known as CSDC, the tanker and bulker arm of CSG, the restructured Cosco Shipping Energy Transportation Co has discontinued its bulk shipping segment and transferred the business to the new Cosco Shipping Bulk. The new entity also took on the tanker assets of Cosco’s Dalian Ocean Shipping and renamed it Cosco Shipping Tanker (Dalian) Co. Cosco Shipping claimed that Cosco Shipping Energy Transportation is now the world’s largest tanker fleet owner. This tanker transportation arm is considered an important setup for China, which seeks to strengthen its capabilities in the global shipments of oil and gas in order to ensure the country’s energy security.

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 CS Specialised CarriersCosco Shipping Specialised Carriers operates more than 150 ships including multipurpose vessels, heavy lifts, semi-submersibles, car carriers, logs and asphalt carriers, and ice-class vessels. The renamed entity continues to focus on the business of specialised shipping, continuing from what Coscol had been focusing on before the major business structure shakeup.

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CCS Portsosco Shipping Ports Limited operates 46 container terminals worldwide with overall throughput reaching 90m teu, making it the world’s second biggest terminal operator with a market share of 11.6%. Having consolidated its market position after the reorganisation of Cosco and CSG, Cosco Shipping Ports has become the flagship terminal for the parent firm, and can expect to benefit from container trades brought about by the 1.58m teu fleet commanded by Cosco Shipping Lines.

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 CS HoldingsCosco Shipping Holdings has been streamlined to provide container shipping and terminal services, a change from the its previous identity of China Cosco Holdings Company, which was the listed flagship and subsidiary of Cosco. The reorganisation saw the new Cosco Shipping Holdings disposed of its dry bulk business to Cosco Shipping Bulk, and to focus on container shipping and terminal services. The new business includes taking over agencies and terminal companies under CSCL.

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CS International HKCosco Shipping International (Hong Kong) Co is now basically a ‘one-stop’ shipping services provider in China, similar to its previous business of ship trading and supply services. The new entity’s integrated shipping services comprise of ship trading, marine insurance brokerage, supply of marine equiment and spare parts, production and sale of coatings and bunker supply.

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 CS Financial HoldingCosco Shipping Financial Holding, a new entity based in Hong Kong, aims to support Cosco Shipping in the areas of financial services such as ships and containers leasing, freight forwarding services, equity investments, internal finance management and insurance, and so forth. It is essentially the group’s “go to” platform for any finance related matters.

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CS Development

Cosco Shipping Development has replaced the familiar container shipowner name CSCL, and even changed the business from container liner operator into an integrated financial services provider. The services include vessel leasing, container leasing and non-shipping finance leasing, supply chain finance, shipping insurance, logistic infrastructure investment and other financial assets investment services. The previous CSCL had been the container arm and main brand of CSG, and the restructuring has led to all the container ships falling under the charge of Cosco Shipping Lines.

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 CS South East AsiaCosco Shipping (South East Asia) Pte Ltd is Cosco Shipping’s Singapore-based entity that manages the group’s companies in the Southeast Asia region. The group views Southeast Asia as a growing market and a key global economy driver, making it important for Cosco Shipping to maintain a presence. Singapore, being the financial and shipping hub of the region, is the natural choice for Cosco Shipping (South East Asia) to be headquartered. The new entity manages more than 50 companies of the group in the region.

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 CS Heavy IndustryCosco Shipping Heavy Industry is one of the last few “Cosco Shipping” entities to be unveiled by the parent Cosco Shipping, due in part to the more complex integration process of the various shipyard subsidiaries of the former Cosco and CSG. Formed from the merger of Cosco’s shipyard companies Cosco Shipyard and Cosco Shipbuilding Industry Company and CSG’s China Shipping Industry Co, Cosco Shipping Heavy Industry now has a combined shipbuilding capacity of 11.55m dwt and can repair approximately 1,500 ships a year. But going big on capacity is not ideal amid the severe slump of the shipbuilding sector, pointing to the new entity’s aim to shrink yard capacity to 9.6m dwt by end-2020. The affiliated yards include 13 large-scale shipyards and more than 20 supporting service companies mainly engaged in shipbuilding, offshore and marine equipment manufacturing, and ship repair.

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1702171630210242538.jpgCosco Shipping Captive Insurance, established in Shanghai, is wholly-owned and controlled by its insureds, with the primary purpose of insuring the risks of its owners. The Shanghai-based entity will form an important unit of the group, providing various insurance services for all the affiliates of Cosco Shipping, and help with the group’s expansion and development of financial services. Cosco Shipping Captive Insurance is known to be the first shipping captive insurance company in China.

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Cosco Shipping Logistics is headquartered in Tianjin and has undertaken the goal of becoming one of the world’s leading integrated logistics supply chain service providers. The new entity has in place various systems to faciliate highway bulk transportation, large-scale transhipment transportation and multimodal transportation, as well as centralised cargo trunk information system. Cosco Shipping Logistics engages in integrated freight, warehousing logistics, shipping agents, engineering and project logistics, with an aim to offer the full suite of logistics solutions for customers and partners.

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 Cosco ShippingCosco Shipping is headed by Xu Lirong, chairman of the board and previous chairman of CSG. Wan Min, previously Cosco’s deputy general manager, is general manager and board director of Cosco Shipping.

As a whole, Cosco Shipping will focus on a so-called “6+1” industrial cluster, namely shipping, logistics, finance, equipment manufacturing, shipping services, real estate industry, plus ‘Internet Plus’ innovative business. The group believes that by proceeding with the 6+1 strategy, it will achieve a holistic operational chain and globalisation of its business.

The group has launched corporate branding under the tagline “We are ready” and the corporate video of Cosco Shipping can be viewed below:

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Last updated on 10 March 2017

Posted 17 January 2017

© Copyright 2017 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Lee Hong Liang

Lee Hong Liang
Asia Correspondent, Seatrade Maritime

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