EU to vote on Maersk, Hamburg Sud deal by March 27

Dive Brief:

European Union antitrust legislators will vote on Maersk Line's bid to acquire Hamburg Sud by March 27, Reuters reported Wednesday.
The customary approval process could require Maersk to divest some assets, as it is already one of the largest lines in a prominent alliance.
Port Technology reports such requests, including foregoing alliances, are not uncommon in major deals, although no stakeholder has indicated this could be necessary.

Dive Insight:

Maersk's purchase of Hamburg Sud would increase the No. 1 carrier's market share of containerized freight to 18.6%, up from the line's current 15.7% share.

Given the various slot purchase deals and participation in the 2M alliance with MSC, it is no surprise there is some concern whether the line is acquiring too much share, too quickly. Its partner MSC boasts a 14.2% market share, while the third largest line CMA CGM has a share of 10.9%. In effect, the deal would make Maersk Line more than double the size of 60% of the top 10 shipping lines currently in the market.

Given these concerns, Port Technology cites the example of China's rejection of the P3 alliance between Maersk, MSC and CMA CGM in 2014. Since then, however, three new alliances have been approved, and various more deals announced. The U.S. regulator, the Federal Maritime Commission, has stated shippers should not worry about a lack of competitiveness due to these alliances citing market hardships.

With low rates commonplace and overcapacity at its core, carriers are seeking synergies and Maersk Line, in particular, stated it sought to gain prowess through acquisition. Expanding the scope of a line will enable it to hopefully replace acceptable rates with greater services while the industry recovers.

Finally, a 18.6% market share may be high for the industry, but is hardly a monopoly. In fact, like many other lines, Maersk has undergone at least two consecutive quarters of losses. While the company is optimistic about the future, no clear indication exists that the purchase of Hamburg Sud will lead to profit.