China takes lead in Pacific shipping after US$6.3bil deal

SINGAPORE: China is the new leader of shipping trade to the Americas.

State-owned Cosco Shipping Holdings Co’s US$6.3bil offer to buy Orient Overseas International Ltd would create an entity that’s the biggest shipping company moving boxes to the North American continent from Asia, beating Copenhagen-based A.P. Moller-Maersk A/S and France’s CMA CGM SA.

The takeover, announced Sunday in Hong Kong, would also create the biggest sea-box carrier through the Pacific Ocean.

The consolidation may help raise container rates on the Americas route – the second-busiest in the world – a critical piece in the survival of the shipping industry that has been battling slumping charges and overcapacity.

Earlier this year, Maersk and Hyundai Merchant Marine Co said that they managed to get higher fees from customers on their annual rate-negotiation talks on the trans-Pacific routes.

Moving goods to Europe from Asia is the world’s biggest shipping trade route.

The Cosco-Orient Overseas combination would have the capacity to move a weekly average of 77,208 containers between Asia and North America, based on end-May data from Alphaliner, a shipping data provider.

In the Asia-Europe trade lane, the combination will become only the third biggest.

Shares of Orient Overseas surged 20% to HK$72 yesterday in Hong Kong, the biggest gain in eight years. Cosco shares jumped 5.4% following last Friday’s 11% advance.

The mainland shipping company would receive bridge loans from Bank of China to help fund the purchase, chief financial officer Deng Huangjun told reporters in Hong Kong yesterday.

Officials also said Cosco has no plans for further acquisitions and has no timeline on when it expects to get all the regulatory approvals needed to complete the transaction. —Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3


Next In Business News

New properties lift Axis REIT Q1 income�
Leaked EU-Pfizer contract shows price for Covid-19 vaccines set at €15.5 per dose
Widad's unit secures RM90mil water treatment plant upgrade job in Kedah
Tasco buys 50% stake in Sabah cold chain logistics firm�
Techna-X in joint venture to develop EV technology�
THHE buys Destini's stake in ship building joint venture�
Petronas awards South East Collins Cluster cluster PSC to Vestigo
FBM KLCI ends at intra-day low in line with regional retreat
Norway's wealth fund earned $46 billion in Q1 as stocks rose
HK online brokerage Futu raises US$1.24bil to cash in on margin lending boom

Stories You'll Enjoy