Rumors of OOCL Sale Intensify

container ship

By MarEx 2017-01-18 00:37:45

Shipping analyst Alphaliner has voiced a rumor that has been circulating throughout the container shipping industry: that Orient Overseas International might sell its Hong Kong-based ocean carrier Orient Overseas Container Line (OOCL).

“As the merger and acquisition activity has swept the global container shipping industry, OOCL can be the next victim.”

Shares in Orient Overseas International have increased by over 20 percent at the Hong Kong stock market since the beginning of the year. Alphaliner says that China’ COSCO and Taiwan’s Evergreen are possible buyers of OOCL. However, neither company have officially expressed any interest yet. 

OOCL is ranked as the fourth largest container carrier in Asia in terms of tonnage, following COSCO, Evergreen and Yang Ming Marine Transport, and as the ninth largest container carrier worldwide. 

The rumors come as the industry suffers a global downturn. Analyst Dynamar notes that for the first time, as a group, the 25 largest container ship operators collectively posted a net loss in 2015. 

Alliance action over the last couple of years has included:

Four East-West alliances started in January 2015:
•    2M - Maersk Line, MSC
•    CKYHE Alliance - Coscon, Evergreen, Hanjin, “K” Line, Yang Ming
•    G6 Alliance - APL, Hapag-Lloyd, Hyundai, MOL, NYK, OOCL
•    Ocean Three - China Shipping, CMA CGM, UASC

In April/May 2016, carriers announced drastic re-arrangements of their groupings. Taking effect April 2017, these will be:
•    2M+ - Maersk Line and MSC, plus Hyundai sharing space
•    Ocean Alliance - CMA CGM/APL, Coscon, Evergreen, OOCL
•    THE Alliance - Hapag-Lloyd/UASC, Hanjin, “K” Line, MOL, NYK, Yang Ming

Consolidations actualized or initiated in 2016 saw six of the original top 20 lines go:
 
•    China Shipping merged into Coscon (February)
•    Acquisition of APL by CMA CGM (June)
•    Hanjin going under (September)
•    Merger-to-be of UASC into Hapag-Lloyd (1Q 2017)
•    The proposed joint venture between “K” Line, MOL and NYK (September 2017)
•    Maersk Line’s intended acquisition of Hamburg Süd (late 2017)

In the course of all the above sweeping, powerful changes, smaller liner companies come under great pressure to consider consolidation, says Dynamar.