Friday, December 6, 2013

Container Shipping Lines Consider a Deal

Two of the World's Notable Carriers Consider Amalgamation
Shipping News Feature

GERMANY – SOUTH AMERICA – WORLDWIDE – Shipping groups Hapag-Lloyd and Chilean based CSAV (Compañía Sud Americana de Vapores) have announced they are in discussion over a possible merger or similar commercial affiliation. The German box line was listed as the 6th largest container shipping line in 2012 whilst CSAV comes in at 20th with around a third of the German groups overall turnover in terms of TEU. With the threat of even more over capacity as ever larger ships roll off the blocks it seems that, as with the P3 and G6 alliances, many believe that size matters.

A CSAV statement said that ‘Hapag-Lloyd and CSAV are currently maintaining discussions if a possible business combination or any other form of association would be of mutual interest. To date, these discussions have not resulted in any binding or non-binding agreement between the parties. Should any relevant development occur, more information will be published.’

Hapag-Lloyd has an interesting history of late with regard to possible associations, following the upheaval in 2009 when the TUI group disposed of the company to the Albert Ballin consortium citing losses as the reason, the German governments underwriting of a €1.2 billion loan, and the company’s subsequent improvement in the following year. The carrier has regularly been associated with various similar deals over several years, including recently with neighbours Hamburg Süd and serially with Neptune Orient Lines (NOL).

In August Hapag-Lloyd announced it was moving its TransAtlantic services from Thamesport to Southampton and, as reported in another story today, is party to the G6 Alliance which is expanding operations, apparently in order to compete with the mooted P3 Grand Alliance formed by the industry’s biggest companies.

This drawing together of so many of the big hitters in the field of container carriage may prove a minefield for the regulators as well as the companies. As we are seeing unfold in the case of Eurotunnel’s twin operations across the English Channel, when two or more regulatory authorities have to rule on the legality of antitrust or anti-competitive actions by shipping groups, they may arrive at very different conclusions, particularly when national interests are involved.