China Cosco Shipping Corporation Limited, a new company established by the restructuring of China’s top two shipping firms, was officially established on February 18.
With the merger of China Cosco and China Shipping, the newly formed conglomerate emerges as holder of the world’s largest shipping capacity and as the fourth biggest container fleet, with CYN610 billion (US$93.6 billion) in assets, according to a report by Xinhua.
Reports said the combined fleet of the new shipping firm will be 832 vessels, almost three times those owned by Maersk Line, although the Danish shipping giant remains the world’s largest box liner with a container fleet comprised of 285 owned vessels and 305 chartered ships.
Xu Lirong, chairman of China Shipping, was announced as chairman of the new company headquartered in Shanghai.
The restructuring will integrate the resources and talents of Cosco and China Shipping and achieve economies of scale, Xu said, noting that the new company aims to be the global leader in shipping, integrated logistics, and related financial services.
Approved in December by the State Council, which is China’s Cabinet, the restructuring plan for Cosco and China Shipping involved four out of eight listed arms controlled by the two companies.
The restructuring was the most complicated ever in China’s capital market, with 74 asset transactions worth CNY60 billion, said the report.
China is restructuring and merging state-owned enterprises to increase their competitiveness. The top two high-speed rail makers and two leading nuclear power companies have already merged.
The shipping reshuffle came at a time when weak demand and excessive capacity have been hurting the global shipping industry.
Cosco and China Shipping had been”under relatively heavy pressure” to combine due to the market downturn and fierce competition from foreign rivals that had carried out mergers and restructurings to gain advantages, Xu told Xinhua.
The two firms had similar operations with overlapping investments and low efficiency, making restructuring imperative, he said.
China Cosco Holdings and China Shipping Container Lines, two listed firms under Cosco and China Shipping, saw their shares rise 2.82% and 3.16%, respectively, on the Shanghai bourse on February 18.
Xu viewed the deal as a boost to China’s influence in the global container shipping market, adding that the world’s top three container shippers, all Western companies, now control 40% of global capacity, while Asia accounts for 70% of the world’s container freight volume.
Photo: kees torn
