Chinese Shipping Conglomerates to Merge

China Merchants Energy Shipping (CMES) and Sinotrans & CSC Group are set to merge as part of the Chinese government’s ongoing plan to consolidate its state-run shipping sector.

According to media reports, the merger was ordered by the Chinese government on September 2. 

CMES is the shipping division of the China Merchants Group and Sinotrans was formed as a result of a 2009 merger between the China National Foreign Trade Commission and the Changjiang Shipping Co. 

The two shipping companies began integrating their operations in August 2014 when they formed a $1.1 billion joint venture named China VLCC. CMES owns 51 percent of the venture and Sinotrans holds the remaining 49. 

The CMES-Sinotran merger comes on the heels of a potential merger between shipping companies, China Ocean Shipping Company (COSCO) and China Shipping Group (CSG) announced last month. 

COSCO and CSG rank as the world’s sixth and seventh largest carriers respectively by fleet size and would form the world’s fourth-largest container line. Both companies have suspended trading of their listed subsidiaries since August 10 pending a major announcement. 

China hopes to curb losses due to overcapacity in the market by consolidating its state-owned assets.