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HomeBreaking NewsTop box liners bare new merger, alliance moves amid depressed market

Top box liners bare new merger, alliance moves amid depressed market

An_OOCL_vessel_passing_by_CT9As container lines struggle to remain profitable in a market beset by overcapacity and weak demand, two liners have announced merger talks, while four others are forming a new alliance.

In a written statement, German box liner Hapag-Lloyd AG (HL) and the Middle East’s United Arab Shipping Company SAG (UASC) said they are “currently discussing forms of cooperation including a potential combination of their mutual container shipping operations.”

In case the merger pushes through, “the parties are basing their discussions on a relative valuation of the two businesses at 72% (HL) and 28% (UASC), subject to a mutually satisfactory completion of the negotiations and the mutual due diligence exercise,” the statement added.

“To date, the discussions conducted between the two carriers have not resulted in any binding agreement and no assurance can be given that these discussions will lead to a definitive agreement.”

Analysts say Hapag-Lloyd is under pressure to find a partner as it was left out of recent tie-ups and alliance re-groupings.

OCEAN Alliance

As this developed, CMA CGM, COSCO Container Lines, Evergreen Line, and Orient Overseas Container Line signed on April 20, 2016 a memorandum of understanding to form a new cooperation to be called OCEAN Alliance, which will cover the Asia-Europe, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, Trans-Pacific, Asia-North America East Coast, and Trans-Atlantic trades.

“This new partnership will allow each of its members to bring significantly improved services to its respective customers,” member carriers said in a statement. “Shippers will have an attractive selection of frequent departures and direct calls to meet their supply chain needs, including access to a vast network with the largest number of sailings and port rotations connecting markets in Asia, Europe and the United States.”

“The Alliance will also bring service reliability and the most efficient integration of the latest vessels in a fleet of over 350 containerships.”

Initially the deployment will cover more than 40 services globally, mostly connected with Asia, including about 20 services each in the U.S. and Europe related trades.

Subject to regulatory approvals of competent authorities, the new alliance plans to begin operations in April 2017, with an initial period of five years of cooperation.

Photo: Modlem

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