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Mergers and alliances in the shipping industry

During 2016, shipping companies have embarked on a series of mergers and alliances to shore up their finances, improve their efficiency, and tackle the industry's oversupply.

William Bennett, an analyst at VesselsValue, classified the five largest consolidated containerized shipping fleets and their market dominance. 

The recent announcement of Maersk's plans to acquire Hamburg Süd marks the latest twist in this consolidation story, which continues with other mergers and acquisitions announced between Hapag-Lloyd and UASC; CMA CGM and NOL / APL, the Chinese companies Cosco and CSCL; and the Japanese companies NYK Line, MOL and "K" Line.

According to the expert, by acquiring Hamburg Süd, Maersk would have a 9.7% market share of the world's container shipping, representing a value of 9.9 billion dollars and an available fleet of 319 ships.

China Cosco Shipping, would get a 6.9% share and a value of 7 billion dollars and 190 ships.

Meanwhile, once CMA CGM merges with APL, it will have a 6.0% market share, equivalent to US $ 6 billion.

In turn, Hapag-Lloyd, after the integration of CSAV and the absorption of UASC, would have 5.3% of the containerized business, accumulating a value of 5.4 billion dollars and a fleet of 123 ships.

The merger of MOL, NYK Line and "K" Line accounts for 5.2% of the market, with a valuation of 5.1 billion dollars and a fleet of 129 ships. 

Case by case  
Maersk/Hamburg Sud. Maersk has confirmed that it will acquire Hamburg Süd, which has a strong position in North-South trade routes and which will complement Maersk's usual business. The latter will pay 4 billion dollars for Hamburg Süd, whose fleet is valued at 1.5 billion dollars. This negotiation is expected to be completed in 2017. In addition, this alliance will position 2M with 15% of global capacity.

China Cosco Shipping. In December 2015, the Chinese Government approved the merger between Cosco and China Shipping in order to create a stronger and bigger national shipping company endowed with competitive advantages and to prevent both companies from competing against each other. China Cosco Shipping has now made the largest order of ships consisting of 29 ULVC and 4 Post-Panamax containers. The Chinese container fleet is valued at US $17.6 billion, and it is the most valuable fleet in the market, accounting for about 17%.

CMA CGM/APL. The biggest acquisition of the French giant was the purchase of Singapore's NOL shipping group, which is better known for its APL brand. It was recently confirmed that APL would join CMA CGM in the so-called Ocean Alliance, which would account for 14% of the overall capacity of containers, occupying second place after 2M. This acquisition would create the third most valuable fleet in the industry.

Hapag Lloyd/ UASC/ CSAV. After having achieved the integration of the entire Chilean CSAV container business, the company continues to escalate its growth by signing an agreement with UASC. With this new merger, Hapag-Lloyd will lower the average age of its container fleet from 8.7 years to 7.8. Hapag Lloyd and UASC will be the fourth most valuable fleet.

MOL/ NYK Line /K Line. One of the most recent mergers announced was that of MOL, NYK, and K Line. These companies will only merge their container transport businesses and, according to expectations this merger will be completed in 2018. The most valuable container fleet is Shoei Kisen, which is valued at 3 billion dollars and ranks eighth in the global ranking. By comparison, no other Japanese companies ranks in the top 10 largest container-ship fleets. The merger shows that consolidation can be effectively used in the container transport industry to create big brands with medium-sized shipping companies. The new agreement will create the fifth most valuable brand with 5.1 million dollars.

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