Newly Minted COSCOCS to Keep Alliances for Now, Review Partners Later

Photo credit: COSCO
Photo credit: COSCO

Reuters

SHANGHAI, Feb 19 (Reuters) – China Cosco Shipping (COSCOCS), China’s biggest shipping line, plans to carry out a careful selection of its future vessel-sharing alliance partners, but will maintain its two current alliances for the moment, the company said on Friday.

Analysts have said the global network of vessel-sharing alliances on container routes could be shaken up by recent deals, including the formation of COSCOCS through the merger of China Ocean Shipping (Group) Company (COSCO) and China Shipping Group.

China COSCO , a unit of COSCO, is part of the CKYHE alliance with Kawasaki Kisen Kaisha, Yang Ming Marine Transport, Hanjin Shipping and Evergreen Marine, while China Shipping Container Lines , a unit of China Shipping Group, CMA CGM and United Arab Shipping Co make up the Ocean Three alliance.

“The new group will choose its future partners carefully, and is committed to building a strong and competitive alliance,” a spokeswoman for COSCOCS said in an email to Reuters.

“To ensure continued and stable services, the company will maintain operations in the two alliances until the alliance reorganisation is complete.”

These sorts of alliances were formed to combat a downturn in the shipping industry, which has been battling overcapacity since the 2008 global financial crisis. Tough business conditions forced operators to look for ways to become more efficient.

In 2014, Chinese authorities blocked a deal between Maersk Line, Mediterranean Shipping Co (MSC) and CMA CGM. Maersk and MSC, the world’s two largest container liners by capacity, later formed their own alliance.

COSCOCS’s launch also comes two months after CMA CGM proposed to buy Singapore’s Neptune Orient Lines for $2.4 billion. (Reporting by Brenda Goh; Editing by Muralikumar Anantharaman)

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