As shipping carriers continue a consolidation spree, the likelihood of COSCO’s purchase of OOCL demonstrates that industry consolidation is anything but complete.
China’s COSCO Shipping may acquire Hong-Kong based Orient Overseas Container Line in the near future, The Loadstar reported Tuesday.
COSCO and OOCL are ranked No. 4 and No. 7 respectively on the Alphaliner Top 100 list, showing that even the largest carriers are not exempt from the industry’s financial struggles.
The mergers and alliances further indicate the shipping industry’s desire to drive down costs and deliver more products with fewer ships. Some shipping lines are pursuing M&As in order to up their revenue: Maersk Line, for example, reported a $1.9 billion loss during fiscal year 2016, then announced its plan to acquire Hamburg Sud, a German container line, in December. This may be COSCO’s strategy, as the company experienced a $9.9 million loss in fiscal year 2016.
Consolidation may keep some carriers afloat and drive down operating costs in the short run, but in the long run, a decline in competition could hike shipping costs for suppliers and consumers.