Dive Brief:
- COSCO Shipping is considering selling OOCL's terminal in Long Beach in order to clear the ocean liner deal, The Wall Street Journal reported.
- The sale would be a divestment to appease the U.S. Committee on Foreign Investment, which has expressed concerns over a Chinese state-owned enterprise taking control of one of the country's most important container terminals.
- Neither COSCO nor U.S. regulators have confirmed the action, but shipping line executives have said they expect to complete the OOCL takeover by June, and U.S. concerns are posing a challenge.
Dive Insight:
The U.S. and China are caught in a game of three-dimensional chess, but China got a head start.
The nation has long linked its economic prowess with its ability to invest in, and control, supply chains. The country is spending up to $8 trillion to create a modern silk road — deemed "One Belt, One Road" — that will revolutionize trade in at least 65 countries. It is also aggressively growing infrastructure in developing countries, pursuing notable projects like an alternative to the Panama Canal in Nicaragua.
COSCO, meanwhile, has emerged as one of China's preferred agents in this process.
5/ In the last year Chinese co’s have spent $20 billion(!) buying up global PORTS, after spending $10B the year before…
— Josh Wolfe (@wolfejosh) July 18, 2017
The country's leadership notably pushed a merger between China Shipping and COSCO Container Lines in 2015, and is rumored to have been behind the OOCL (a Taiwanese company) takeover offer last June. In that time, the shipping line has also spent billions buying up port terminals worldwide, from Greece to the United Arab Emirates.
The U.S., it seems, is finally catching on and doing what it can to stop China from exerting too much power in the country.
COSCO has additional terminals in Long Beach, Los Angeles and Seattle, although these are not being considered for divestment, according to the Journal.
The next question is: who would buy the Long Beach terminal, if COSCO/OOCL does sell?
