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
We're sorry, this article is unavailable at the moment. If you wish to read this article, kindly contact our Customer Service team at 1-300-88-7827. Thank you for your patience - we're bringing you a new and improved experience soon!
What do you think of this article?