China-Cosco’s ‘New Entity’ Merger


In a new scheme led by Xu Lirong, Chairman of China Shipping Container Lines (CSCL), the newly announced merger between Cosco-CSCL will operate as a new entity, according to gCaptain.

The operational details of the merger include the swapping of assets and a focus on vessel leasing and container shipping.

Beijing first ordered the merger in August, 2015 in a bid to tackle the slump in the global shipping industry.

Plans have since accelerated, with the Chinese State Council clearing the way for the merger to come into fruition.

Cosco will oversee container shipping operations, while CSCL will be managing areas which include financing and ship-leasing, with both companies stating their belief that integration of resources can lead to a better return on investment.

Shipping lines have been ordering vessels since the beginning of 2015 in order to reap the benefits of economies of scale and effectively lower slot costs, however with slowdowns in the global economy and ships of ever larger sizes on order, the risk of exacerbating current overcapacity is a factor for the industry.

Barclays has estimated the carriers’ combined assets are worth more than US$74 billion.

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