COSCO acquires OOCL

The China Ocean Shipping Company (COSCO), a government-owned company of the People’s Republic of China is in process of acquiring the Orient Overseas Container Line (OOCL), a Hong Kong based global shipping company.

The 6.3 Billing USD acquisition is said to make COSCO the third largest global container shipping company (in terms of market share). The move also emphasizes China’s ambitions to dominate the world maritime trade.

OOCL had recently announced launch of the 21,413 TEU OOCL Hong Kong, world’s largest container ship. The acquisition will improve COSCO’s efficiency as OOCL’s IT & fleet management systems are said to be far superior.

The MOL-NYK-K Line merger to form the new ONE (Ocean Network Express) company followed by COSCO acquiring OOCL hint towards consolidation in the global shipping business.

Oversupply of tonnage in the market has lead to sharp fall in freight rates. This coupled with increased protectionism can lead to reduced supply of cargo as well.

Until a favorable demand – supply situation arises, we may witness more closures, mergers & acquisitions of Shipping Companies.