Cosco-China Announce Merger Extension

Six months after the shares of both Chinese state-owned shipping lines China Shipping Container Lines (CSCL) and Cosco group were suspended, the liners have announced that their merger plans will now be extended until January 10, 2016, according to the Journal of Commerce.

China-Cosco said: “After analysis and negotiations with the parties concerned, the controlling shareholder is planning the assets consolidation of related business segment of associated companies, which involves the company’s material asset reorganisation.

“So far, the relevant matters are still under research and analysis.”

If the merger goes ahead as planned, the two companies are anticipated to have a combined market share of 8%.

Read a Technical Paper on the impacts of mega-ships and alliances

It was previously reported that the two container lines had moved into the advanced stages of a merger, stating that they were planning to merge container shipping units, as well as, to a lesser degree, terminal operations.

The merger was originally ordered by Beijing in order to more effectively deal with the slump that is taking place in the global shipping industry.

The Baltic Dry Index – which measures the success of global trade – recently slumped to 504, compared to 1,296 seen in 2014, suggesting that a wave of new alliances could form in the coming years to enable shipping lines to stay afloat.

If the merger goes ahead, this could cause complications not only for each company’s prospective alliances but also for ports and terminals.