Budding Merger Trend among Shipping Companies Something Out of the Ordinary
Lately, specifics of a merger are being discussed between COSCO and China Shipping, China’s two biggest shipping companies, while various media outlets have forecast its completion in 2017. COSCO has a 4.8% share and China Shipping has a 3.6% share of the current liner shipping market. If a merger realizes, the combined company’s market share will shoot up to 8%, thus placing it at fourth after CMA-CGM (8.9%). Meanwhile, it was reported that UASC was going to acquire APL. Provided the merger of the two companies realizes, their combined market share will soar to 5% and their combined fleet will exceed 1 million TEU.
|Shipping routes to North America||MSK 9.6%
|Shipping routes to Europe||MSK 19.0%
If you look at the market shares for the four major alliances as shown on the table, 2M has 14.3%, CKHYE has 35.6%, G6 has 30.6%, and O3 has 11.9%, thus showing CKHYE and G6 as rulers of the North American market. For European shipping routes, 2M takes up 35.2%, CKHYE takes up 23.8%, G6 takes up 18.4%, and O3 takes up 21.1%, thus showing 2M and O3 as dominating the market.
If COSCO and China Shipping really merge and the combined company chooses CKHYE, it will significantly compromise the market dominance of O3 in European shipping routes. On the contrary, if the combined company chooses O3, it will significantly diminish the market dominance of CKHYE in North American and European shipping routes.
Furthermore, if major shipping companies break out of an alliance, it inevitably brings change to the fleet organization, ports of call, and services for the entire alliance. In this light, we can expect that the merger and acquisition trend among major shipping companies will reorganize the current alliances while the combination of shipping companies will create new alliances.
Besides, since the strategic alliances are closely related to the ordering of super-large ships and collection of cargoes, global shipping companies should wisely cope with the changes coming to the current alliances.