Cosco given EU green light for OOIL takeover

Cosco given EU green light for OOIL takeover

An OOCL ship sails under the Tsing Ma Bridge in Hong Kong. Photo credit: OOCL

China state-owned Cosco Shipping has received the stamp of approval from the European Commission for its $6.3 billion takeover of Orient Overseas Container Line parent Orient Overseas (International) Ltd., clearing the way for the deal to proceed.

The European Commission green light follows tacit approval by US regulators in October when they allowed the objection period to pass, approval by Cosco shareholders in October and a clearing of the acquisition by China’s State-owned Assets Supervision and Administration Commission of the State Council.

In its ruling, the commission said it had examined the impact of the proposed takeover on the deepsea container shipping markets where OOIL and Cosco were active and found there would be no competition concerns because of the presence of “significant competitors post merger.”

Despite finding that the market share of the combined Cosco-OOIL company and its Ocean Alliance partner CMA CGM would be significant, especially on the trans-Atlantic, the EC said Cosco itself had a marginal presence on the North Europe-North America route, and it did not believe the acquisition would give rise to any competition concerns.

In a joint statement filed on the Hong Kong and Shanghai Exchanges, Cosco Shipping and OOIL said, “The joint offerors are pleased to announce that with respect to anti-trust review in the [European Union] under the EU Merger Regulation on 5 December 2017, the European Commission made a decision to allow the offer to proceed.”

Under the takeover deal, expected to be completed by April 2018, Cosco will hold 90.1 percent of OOIL and Shanghai International Port Group will hold 9.9 percent. The liftings of Cosco and OOCL would take the combined carrier volume past those of Maersk Line-Hamburg Süd, according to Alphaliner.

Cosco's total liftings reached 5.49 million TEU in the third quarter, while OOCL recorded total liftings of 1.6 million TEU. Their combined volumes of 7.09 million TEU would still be higher than the combined volume of Maersk and Hamburg Süd of about 6.36 million TEU.

Alphaliner said Cosco’s lead in total liftings was driven by a very high proportion of short-sea intra-Asia and China domestic shipments, which currently accounted for 59 percent of the carrier’s total.

The Cosco-OOIL deal is likely to be the last of the mega-mergers for some time, and follows a wave of consolidation that has completely reshaped the container shipping industry over the last two years. The world’s largest container lines in April sorted themselves into three major vessel-sharing alliances — the 2M, Ocean Alliance, and THE alliances — in an effort to regain profitability after years of multibillion-dollar losses.

This has not gone down well with shippers, however, who are left with fewer choices and less direct port calls on the major east-west trades.

European Shippers’ Council (ESC) maritime policy manager Fabien Becquelin said recently that the ESC was not against alliances or any form of cooperation as such. “We just want to be sure it is done to the profit of the customer, to the profit of the cargo and the logistics chain as a whole,” he told

“Until now concentration and alliances have not been to the profit of the customers with a lot of reduction in calls in each port, in the number of ports calls around Europe. Of course, some ports win with more calls from alliances, but on a larger scale at a European level, the balance is negative. Increased size of ships has only led to congestion at ports and spikes in activity, which is not good for the fluidity of the supply chain.”

At the Port of Hamburg, greater numbers of ultra-large container ships with capacities of more than 20,000 TEU were calling at its terminals — the port has handled almost 90 percent more calls from these giant vessels this year — which means that up to 14,500 TEU can be handled in one ship call. This leads to container transport peaks and creates bottlenecks around the port.

Hamburg last week began a time slot-booking system for handling container delivery and collections by truck in an attempt to mitigate the impact of increasing mega-ship calls.

Contact Greg Knowler at and follow him on Twitter: @greg_knowler.