A US$2.5 billion deal, which will allow third-largest container shipping line CMA CGM to acquire Neptune Orient Lines, has been approved by China’s Ministry of Commerce, according to IHS Fairplay.
This follows news that the shipping line had received approval from the EU, with the EU giving one condition that NOL leaves the G6 alliance, which is a rival to CMA CGM.
CMA CGM received the funding required for the NOL acquisition in December, 2015, after banks had expressed an interest to financially commit to the deal.
This was followed by news that the line had received approval from the NOL board to commence with the transaction.
Despite the deal, it was recently reported by PTI that NOL had seen a loss in Q1, 2016 of $105 million.
This result was influenced by the slumping freight rates and worsening overcapacity that is affecting many shipping lines in the industry.
However, leading shipping carrier Maersk Line was able to see a more than $30 million profit, despite a poor outlook in shipping.
Jon Slangerup, CEO of the Port of Long Beach has said that the industry can expect 1-2 more years of pain as a result of the current musical chairs scenario with global alliances shifts.
IHS Maritime and Trade’s recent analysis shows a trend of the increasing number of mega-ships being introduced into the supply chain.
Despite a dip in the number of mega-ship deliveries expected in 2016, this added capacity will be added to alliances, and therefore put strain on ports and terminals.