After months of restructuring and reorganising its container shipping operations, China Shipping Container Lines (CSCL) and Cosco have officially launched their merger as a new entity called China Cosco Shipping Corporation (COSCOCS).
Analysts have stated that the company must diminish its workforce, as well as its orderbook in order to handle the downturn currently affecting the industry, according to Reuters.
Charles De Trenck, a Veteran Shipping Analyst, said: “Few liner companies are set up at the moment to handle current challenges. Perhaps the first challenge is to shrink the new combined company. Without that, the bleeding will continue at a faster pace.”
Technical Paper: Tackling the Biggest Alliances
Jiang Ming, Analyst for Shanghai-based Essence Securities, said: “The merger gives them a fighting chance. If they didn't merge the status quo would have remained the same.”
Sky Hong and Joe Liew, Analysts for Deutsche Bank, said: “While the latest mergers should further consolidate market share, pricing competition typically intensifies post mergers, based on prior experiences.”
The Chairman of COSCOCS recently announced that the merger between the two companies will be crucial for their development.