Cosco and China Shipping merger announcement due within one month

14/10/2015

Maritime news website Splash247 reports that the formal announcement of a merger between China Shipping and Cosco is little more than a few weeks away. For container shipping it is the first step in some form of consolidation that the industry undoubtedly requires; whilst in the dry bulk and tanker sectors it is likely to create the single largest shipping company in the world. What happens to the lines’ respective memberships of the O3 and CKYHE alliances after that is anyone’s guess.

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Chas Deller
October 29, 2015 at 9:01 pm
The probability of CSCL/COSCO becoming a single entity will and should put fear in the hearts of all BCO’s, especially those with large contractual agreements with both carriers .
Having spent, in my former life, a large amount of time in both carriers HQ in Shanghai, I can testify that we are looking at 2 very different ‘approaches’ to BCO’s and business philosophy in general.

Consider the number of large BCO’s with substantial service contracts with both carriers – having made those decisions sometime earlier this year .I know of one large BCO with an 8000 teu MQC service contract with one of those 2 carriers , that has very specific’ performance ‘ criteria – what now ,- maybe there is a possible breach by the ocean carrier who may not be able to perform to the level of the agreement.
Capacity will change , transit time will change , routing may change, goodness knows the terminals may change , especially in USA, and of course the Alliance process is now massively different.

So , not only will the Alliance configuration change for these 2, but also every other carrier in both the O3 and CKYHE alliances , – just when we thought it was safe to get back in the water…….
The timing will be critical – all ocean carriers will hope that this will come after CNY so that they can use this as leverage to re negotiate ocean contracts for the 2016-7 season on TP trade, at a higher level than before.
On Asia-Europe we have already seen the Maersk Triple E lay up so what should we expect from this new ‘ collaboration ‘ – more capacity cuts for sure , maybe in the 20 per cent range – my guess
All in all it will be a nightmare end to 2015 , goodness knows ocean carriers cant wait for this 2015 nightmare to come to an end …and BCO’s they hold their breath as they try to only imagine the outcome and resultant knock on effect to their supply chains.
We have now reached the next level of ‘ uncertainty ‘ in global ocean shipping.

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