Xu Lirong, Chairman of China Cosco Shipping Corporation has said that the merger between its two companies, Cosco and China Shipping Container Lines (CSCL) is going to be crucial for pulling through the downturn of the global demand slump, which is the worst seen since the 2008 financial crisis, according to Reuters.
Xu Lirong said: “The Baltic Dry Index has been hitting historical lows every day. This is the most difficult period that we are experiencing since the financial crisis.”
The Baltic Dry Index recently fell below 293 points, but has since climbed back up to the 300 mark, signalling a ray hope for the global shipping industry.
Lirong continued: “Our two firms had similar operations; we did not have many advantages in the various sectors we operate in and could not count on economies of scale. The merger is crucial to the development of both companies.
“Meeting the demands of China’s ‘One Belt, One Road’ policy will not be possible without a strong shipping fleet.”
Cosco and CSCL’s merger was approved recently by the Chinese State Council and intends to give carriers a fresh competitive edge in the market as China’s recent slump casts ripples across the supply chain.
The merger is due to come into effect on February 18, 2016 and is anticipated to push up the pair on the global rankings to make them the world’s fourth largest shipping company.
It was also recently reported by Port Technology that the pair are set to form a new mega alliance between some of the world’s largest carriers, including CMA CGM, in a bid to compete with 2M and boost global competitiveness.