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Coming soon: Container shipping’s year of mergers in 2016

The next year will be crunch time for mergers and alliances in the liner shipping industry and a key event in that will be the imminent joining up of Cosco and China Shipping, which is “all but certain” said Odense Maritime Technology vice chairman Tom Behrens-Sorensen.

Vincent Wee, Hong Kong and South East Asia Correspondent

November 17, 2015

1 Min Read
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He was among several speakers at the Asian Logistics and Maritime Conference in Hong Kong, which discussed the prospects for the liner shipping industry.

There has traditionally been a resistance to mergers among shipping lines because of vested national interest, resulting in a still very fragmented market, Behrens-Sorensen added. However, in the case of these two China’s authorities are actually encouraging it.

Behrens-Sorensen declared that “2016 will be a year for more national mergers starting with China”. Other mergers meanwhile will be driven by market forces, he said.

Potential challenges include regulatory hurdles, ensuring the right cultural fit and the lack of financial leverage as the industry slows down and companies do not have as deep pockets anymore.

Talking about the other hot topic merger company, Tribini Capital director Thomas Soderberg said people would be interested in APL more for its connections on the terminal side than for its liner operations.

With loss making operations and not the optimum sizes of ships, there would be little advantage to be had from buying over the liner arm. “I think that anybody in their right mind would not go and buy a loss-leading liner side today,” he said.

Instead, it would be the connections and the trade routes that come with it, especially the intermodal links on the US West Coast that would be of most interest to any potential buyer, Soderberg noted.

About the Author

Vincent Wee

Hong Kong and South East Asia Correspondent

Vincent Wee is Seatrade's Hong Kong correspondent covering Hong Kong and South China while also making use of his Malay language skills to cover the Malaysia and Indonesia markets. He has gained a keen insight and extensive knowledge of the offshore oil and gas markets gleaned while covering major rig builders and offshore supply vessel providers.

Vincent has been a journalist for over 15 years, spending the bulk of his career with Singapore's biggest business daily the Business Times, and covering shipping and logistics since 2007. Prior to that he spent several years working for Brunei's main English language daily as well as various other trade publications.

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