Multi-Million Dollar Box-Freight Shipping Lines and Container Leasing Mergers Continue

WORLDWIDE – The past few months have seen many reports regarding potential mergers between some of the world's largest ocean freight carriers at a time when the industry is suffering from an over-capacity of TEU space and a paucity of suitable freight. Whilst China and South Korea are each considering merging some of their respective container shipping lines, struggling Singapore based Neptune Orient Lines (NOL) has confirmed that it is in separate preliminary discussions with both CMA CGM and AP Moller Maersk for a potential takeover of NOL, whilst US based intermodal container lessors Triton Container International and TAL, have entered into a definitive merger agreement to create a 5 million TEU intermodal container leasing giant.

NOL was put up for sale by the Singapore state investment fund, Temasek Holding earlier this year in July. Temasek currently holds 65% of the company but NOL, which divested itself of APL logistics this year, is heavily indebted and has been steadily losing money, recently reporting a net loss of $96 million in the third quarter of 2015. If either CMA CGM or Maersk manages to acquire NOL, that combined company would have a significantly increased presence in the transpacific trade route and would be a major competitor in the region. NOL was of course regularly associated with Hapag-Lloyd in a deal which never materialised.

Which leads on nicely to the worst kept secret in shipping, the upcoming merger between the Chinese state owned shipping companies, Cosco and CSCL. Currently the sixth and seventh largest container freight carriers in the world respectively, this potential merger has supposedly been in the works since at the very least August 10, when shares in the two firms were suspended from trading. If the Cosco and CSCL deal gets the regulatory approvals needed then the combined company could move to become the fourth largest carrier in the world.

Between them the two companies combined fleets exceed 360 vessels and beside the well-known container freight subsidiaries each has other maritime interests including bulk tanker and terminal management arms.

South Korea appears to be also trying to ease any financial issues its two largest carriers are facing by apparently forcing a merger, something both Hyundai Merchant Marine and Hanjin are reported to have turned down. The two have reportedly both sold off their LNG associated businesses and Hanjin has also rid itself of its dry bulk assets which helped it log $70 million profit last year, both companies have had heavy losses for the past three or four years.

The Korean government, concerned by a situation which sees it rapidly losing the financial ground in several industries, appears keen for the two companies to amalgamate, an attitude it holds toward other sectors, particularly steel producers and shipyards according to the country’s Minister of Finance. For their part doubtless neither Hyundai nor Hanjin will wish to appear to surrender primacy to the other.

In the container leasing market, Triton Container International and the TAL International Group, have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals. This transaction will create what is apparently the world’s largest lessor of intermodal freight containers with a combined container fleet of nearly five million TEUs and revenue earning assets of $8.7 billion.

Under the terms of the transaction agreement, Triton and TAL International will combine under a newly-formed holding company, Triton International Limited, which will be based in Bermuda. Triton shareholders will own 55% of the equity of the combined company and TAL International shareholders will own 45%.