Dive Brief:
- U.S. government regulators have approved the proposed merger between COSCO Shipping and Orient Overseas (International) Ltd. by means of allowing the objection period to pass, American Shipper reported Tuesday.
- China's approval was secured in September, which leaves only the European Union to allow or object to the merger. COSCO Shipping’s shareholders recently approved the $6.3 billion offer to acquire OOIL, which also owns Orient Overseas Container Line (OOCL).
- If the merger passes, COSCO will own 90.1% of OOIL, while Shanghai International Port Group (SIPG) gets the remaining 9.9% percent. COSCO and SIPG are paying $78.67 Hong Kong ($10.07 USD) per share in cash for all outstanding OOIL stock.
Dive Insight:
Does the Cosco-OOIL merger signal the end of the age of carrier consolidation?
Industry analysts doubted the approval of the COSCO - OOIL deal early on in the process, when they warned of fallout in the form of rising rates due to fewer carriers. Despite this perspective, carriers persist in swinging to the opposite extreme from the market saturation present just prior to the Hanjin bankruptcy. Now, with just one more hurdle to overcome in gaining approval, COSCO is preparing to become the world's third largest cargo carrier.
It's hard to imagine the next step for the still-recovering shipping industry. Most if not all successful lines have merged into alliances, and vessels continue to increase in size, so what's left? Some lines such as Maersk are moving toward greater offerings and booking affiliations with Alibaba, while others, like CMA CGM, labor with the ongoing rollover/overbooking issue. Perhaps growing digitization, allowing for greater efficiency at lower costs, and spreadsheets are finally abandoned for good, will become the newest wave.
