Cosco gets terminal stake in landmark Singapore deal

Cosco gets terminal stake in landmark Singapore deal

For the first time, Singapore's main container terminal operator is allowing a foreign firm to take an equity stake in its berths, a move largely spurred by the loss of business to nearby rival ports.

Cosco Pacific Ltd., a Hong Kong arm of China Ocean Shipping (Group) Co., will take a 49 percent stake in a terminal owned by PSA Corp. Ltd. The investment in the venture known as Cosco-PSA Terminal Pte. Ltd. wasn't disclosed.

"The joint venture is Cosco Pacific's first overseas port investment," a Cosco spokesman said. "It will provide us with a solid foundation to further expand our fast-growing terminal business in Asia."

The venture plans initially to operate an existing berth with annual capacity of 500,000 TEUs. By 2008, it aims for annual capacity of 1 million TEUs.

Maersk Sealand, a unit of A.P. Moller of Denmark, and Evergreen Marine Corp. of Taiwan switched most transshipment business from PSA to Tanjung Pelepas in neighboring Malaysia, in part because they were offered equity stakes and dedicated facilities, neither of which the Singapore operator was prepared to offer. Singapore has since offered rebates and discounts to woo ocean carriers.

Singapore, the world's second-busiest container port after Hong Kong, handled 16.94 million TEUs last year, an increase of 8.8 percent over 2001. Container traffic at Tanjung Pelepas jumped 30 percent last year to 2.66 million TEUs.

There is persistent industry talk that Tanjung Pelepas is considering some kind of tie-up with PSA. Senior Malaysian officials have given a broad green light to overseas expansion; PSA does not comment on potential deals.