Friday, April 22, 2016

As Freight Rates Fall Another Potential Merger for Two Container Shipping Giants on the Cards

Potential to Form World's Fifth Largest Box Carrier
Shipping News Feature
GERMANY – QATAR – WORLDWIDE – Following the recent news of another giant collaboration between four of the world’s largest container shipping lines, Hapag-Lloyd and United Arab Shipping Company (UASC) have announced that talks are currently underway of a potential merger. Consolidation in its various forms seems to be the future of the ocean freight industry as overcapacity and falling rates continue to plague the sector.

The potential break-up of the current structure of vessel sharing agreements as illustrated by yesterday’s announcement of the Ocean Alliance and, having squeezed fuel use down to the minimum with the trend toward slow steaming being the norm, the box carriers need to find alternative ways to fill the ultra-large vessels that seemed to be an inspiration when their plans were drawn up.

If this latest potential merger becomes reality for the two companies involved, negotiations in their currently proposed form would leave Hapag-Lloyd shareholders holding 72% of the new group with UASC’s owners holding 28%. Hapag Lloyd is the world’s 6th largest container shipping company with a 4.5% share of the global market, Qatari based UASC come in 10th with a 2.7% share. A merger between the two would result in the new group becoming the world’s 5th largest such group. The German registered company’s shares rose to a three month high upon the news breaking.

Photo: Credit Scandi Models.