Hapag-Lloyd seals union with UASC

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German carrier Hapag-Lloyd and Kuwait-based rival United Arab Shipping Company (UASC) completed their merger on May 24, the union strengthening Hapag-Lloyd’s position as the fifth largest liner shipping company in the world.

“This is an important strategic milestone and a big step forward for Hapag-Lloyd,” Rolf Habben Jansen, group chief executive officer, said in a statement. “We now not only have a very strong market position in Latin America and the Atlantic, but also in the Middle East, where we will become one of the leading carriers.”

He added that their priority now is a smooth and fast integration with UASC, something they expect to be completed “by the end of this year.”

“This process will start in roughly eight weeks and will take until the end of the third quarter,” he continued.

The integration will see 118 Hapag-Lloyd services combined with the 45 services in UASC’s network for an estimated total annual transport volume of more than 10 million TEUs.

UASC’s 58 vessels will be integrated into the fleet of Hapag-Lloyd, with the combined fleet adding up to 230 vessels and having a shared capacity of about 1.6 million TEUs. The fleet will also be one of the youngest in the industry, with an average ship age of 7.2 years.

The average size of the vessels in Hapag-Lloyd’s new fleet will be 6,840 TEUs per vessel, about 30% larger than the average of the top 15 in the industry, which is about 5,280 TEUs per vessel.

Hapag-Lloyd said it plans to achieve annual synergies of US$435 million from the merger. Significant savings should be realized in 2018, while the full amount is expected to first be reached in 2019.

“In addition to the synergies we expect that it will not be necessary to make sizeable investments in newbuildings over the next few years,” said the box shipping line.

The business combination agreement between the two parties was signed in Hamburg in July 2016. Since then, roughly a dozen competition authorities across the world had granted their approval. In addition, changes in the corporate legal structure were made and the consent of several banks was obtained.

Hapag-Lloyd will remain a publicly traded company registered in Germany with its headquarters in Hamburg. It will establish a new regional headquarters for the Middle East region, the fifth after the existing regions of North America, Latin America, Asia, and Europe.

With the merger, the two majority shareholders of UASC, Qatar Investment Authority, through its subsidiary Qatar Holding LLC, and the Public Investment Fund of the Kingdom of Saudi Arabia, will become new key shareholders of Hapag-Lloyd.

Photo by kees torn