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Cosco’s takeover of ‘perfect bride’ OOCL steps towards ‘liner paradise’

Tue 11 Jul 2017 by Rebecca Moore

Cosco’s takeover of ‘perfect bride’ OOCL steps towards ‘liner paradise’

The takeover of ‘perfect bride’ OOCL by Cosco will see the biggest impact in Intra Asia, while the footprint in Asia to Middle East trade will also rise significantly, says UK’s Drewry Shipping Consultants.

The consultancy has dubbed OOCL the ‘perfect bride’ for its good track record for above-average profits in a challenging market and a reputation for being a very well-run company – therefore retaining the management team, processes and systems “is a wise move and could be of enormous value to Cosco”, it said.

It added: “From a marketing perspective the acquisition of OOCL will enable Cosco to broaden its customer base, having previously being perceived, rightly or wrongly, as China-centric. OOCL’s reputation and history with global shippers will provide Cosco with an inroad to a wider selection of big western shippers with volume.”

Another impact will be in the ports of LA and Long Beach, where Cosco has two terminals and OOIL one facility – by 2020 these three terminals will account for nearly 30 per cent of the capacity of LA and Long Beach.

The sale of OOIL/OOCL could signal the end of the recent wave of M&A activity in the container sector. “Such is the scale of the carriers within the top seven [container shipping lines] that any merger within that group would find it difficult to pass regulatory approval. There could still be some minor regional acquisitions but the big wave of container M&A looks to have been concluded with this deal,” said Drewry.

The consolidation that has already occurred, plus much brighter market prospects and the moratorium on new ships, offers carriers a “golden opportunity for far greater profitability in the near future”. Drewry said the impact on the industry was a “liner paradise”.

“With fewer carriers, that in time will become financially stronger,  the pendulum is swinging back towards those that have grown to survive,” it concluded.