Dalian, Yingkou ports set to merge in Liaoning port group

More consolidation is inching along in the China maritime sector as authorities now seem to turn their attention to the port sector, with Dalian Port announcing that it will enter into a cooperation agreement with China Merchants Group (CMG) and the Liaoning government.

The company said in a stock market announcement that had "been informed by its controlling shareholder, Dalian Port Corporation that it had received a notice from the Liaoning Provincial People’s Government in relation to a Port Corporation Framework Agreement entered into between Liaoning Government and China Merchants Group”.

The giant CMG is the parent of China Merchants Holdings (International) (CMHI), which in turn is a substantial shareholder of Dalian Port.

The agreement is aimed at working towards a unified operation platform for Liaoning ports and to establish a Liaoning port group combining Dalian Port and Yingkou Port Group Corporation, which will ultimately lead to the integration of the port management of Liaoning province.

The Liaoning government is expected to support CMG’s investment into Liaoning Port Group which is expected to be incorporated and set up by the end of the year. The somewhat ambitious timeline to complete the integration of other ports management entities within Liaoning Province is by the end of 2018.

CMG is also seen as taking the lead in the management of Liaoning Port Group and promoting the business reorganization and structure optimization of the ports under the jurisdiction of Liaoning Port Group.The move is aimed at "enhancing the cooperation and development of ports, international  competitiveness, promoting the development of shipping centres and related industries with Liaoning Port Group as the core enterprise," Dalian Port said in its announcement.

It warned however that "as at the date of this announcement, the specific cooperation measures with respect to the cooperation are unknown to the company".

"The board wishes to emphasize that the agreement is a framework agreement, it is uncertain that whether, when and how the company will be integrated and how the company will be affected," it concluded..In May this year, the Jiangsu Port Group was formed through the consolidation of the two major port companies in the province, Nanjing Port and Lianyungang Port. It is meant to reduce competition and maximise economies of scale while increasing efficiency of the Belt and Road initiative.

Yingkou Port is northeast of Dalian, deeper in the Bohai Bay to serve more inland areas of Liaoning province. Yingkou Port Group has a FTZ and a regular rail connection to Europe which began in 2013 and connects seven cities in four countries in line with the Belt and Road initiative.

Posted 14 June 2017

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Vincent Wee

Asia Editor, Seatrade Maritime News