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What mega mergers of container lines means for shippers

     OOCL container

COSCO Shipping Holdings has joined forces with Shanghai International Port Group (SIPG) to purchase Orient Overseas Container Line (OOCL), the world’s seventh largest container line for $6.3B USD.  The deal is still subject to regulatory approval and consent from their shareholders.

The merged company will become the world’s third-largest container line after Denmark’s Maersk Line and Swiss based Mediterranean Shipping Co. (MSC), operating over 400 vessels with a market share of 11.6% and a total capacity exceeding 2.9M TEU.

OOCL will continue to operate as an independent brand with headquarters in Hong Kong.

This merger is just the latest in a string of big consolidations that will allow four carriers to control just over 50% of the market, a situation that some say could lead to higher shipping rates, primarily on the transpacific and intra-Asia trade lanes.  The choice of and quality of service available is under threat in the wake of this unprecedented consolidation in container shipping services.  Just two years ago, the top four ocean carrier’s controlled just over 40% of the global market.

Olaf Merk, the ports and shipping expert for The Organization for Economic Cooperation and Development (OECD), says “the shipping industry has officially become an oligopoly.”

This may be the last of the mega mergers we see in the shipping industry as future deals may find difficulty receiving regulatory approval, but more minor intra-regional acquisitions are possible over the next 5-10 years.    

For more information, contact Debbie McGuire, Manager – Freight Solutions.

Quick Tip #4
Country of Origin may not be the Country of Export

Did you know that Country of Origin and Country of Export are not the same thing? Country of Origin indicates where your product is made.

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