German Shipping Companies Plan Alliances

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June 20, 2013

Shanghai Express, image: Hapag Lloyd

reuters logoHAMBURG, June 20 (Reuters) – Half of Germany’s maritime shipping companies plan to enter alliances with peers or deepen existing pacts in the next few months to counter overcapacity and falling freight rates, consultancy PWC said on Thursday.

“We expect more so-called platform solutions to emerge,” said Claus Brandt PWC partner and shipping specialist, referring to jointly-owned entities that buy and operate vessels.

“The market situation forces more and more shippers to consider new ways of doing business. That leads to cooperation.”

A survey by PWC of 100 German shipping groups showed that more the 40 percent of them were already closely cooperating with peers.

Global shippers are also in a push to team up to ease competitive pressures. The industry’s top three, including Maersk Line, on Tuesday agreed to share vessels in a bid to minimize losses caused by over capacity and falling freight rates.

Maersk Line, a unit of Danish shipping and oil group A.P. Moller-Maersk agreed an operating alliance with its two biggest rivals, Switzerland-based MSC Mediterranean Shipping Company S.A. and France’s CMA CGM.

PWC’s Brandt joined other industry experts in saying the Maersk alliance would likely face difficulties in getting antitrust clearance. An agreement on freight rates between the three sector heavy weights was bound to be blocked by antitrust authorities, he said.

A big tie-up attempt in Germany, however, failed recently. The planned merger of unlisted container shipping group Hapag-Lloyd with rival Hamburg-Sued was called off in March because terms could not be agreed.

Key Hapag-Lloyd shareholder Klaus-Michael Kuehne on Thursday was quoted as saying by German monthly Manager Magazin that Hapag-Lloyd may either have to find a new partner or shrink its business to focus on profitable market segments and regions. (Reporting by Jan Schwartz and Ludwig Burger; Editing by David Cowell)

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