Freight Shipping News
SHIPPING INDUSTRY NEWS - 04th February 2014
German and Chilean lines hope to create world’s fourth-largest carrier
HAPAG-Lloyd could achieve its long-term goal of a stock exchange listing next year if plans to team up with the container arm of Chile’s Compania Sud Americana de Vapores are successful.
The two revealed that they were in talks about a possible merger in early December, then signed a non-binding memorandum of understanding in late January as negotiations progressed.
That paved the way for due diligence to begin, with each side opening its books for the prospective partners to examine each other’s balance sheets, look at customer contracts, terminal commitments, ships, and investment plans, and sift through other usually highly confidential corporate information.
Only when both sides are satisfied will the deal go through and there are no guarantees at the moment.
Hapag-Lloyd reached the due diligence stage in 2008 when Neptune Orient Lines made a binding offer, reported to be in the €3bn-€3.5bn range ($4.1bn-$4.8bn), before the Singapore carrier pulled out in October of that year as the markets started to deteriorate.
Germany’s premier line had been put up for sale by parent company Tui, under pressure from shareholders, including Norwegian shipowner John Fredriksen.
With NOL out of the picture, a German consortium consisting of local entrepreneur Klaus-Michael Kuhne plus the City of Hamburg rallied round to keep Hapag-Lloyd out of foreign hands.
But that solution was never meant to be a long-term arrangement, Hapag-Lloyd’s executive board chairman Michael Behrendt stating on numerous occasions that an initial public offering was the eventual goal.
Choosing the right time was the big problem, though, with the volatile container trades making it hard to find a window of opportunity.
Hapag-Lloyd then embarked on merger negotiations with compatriot Hamburg-Süd earlier last year, with a combination of the two lines looking ideal on paper, given their geographic proximity to each other and compatible trade lanes, one focused more on the east-west trades, the other a north-south specialist.
But by all accounts, family-owned, debt-free Hamburg Süd did not want to be a junior partner in the enlarged group, despite having a smaller fleet than Hapag-Lloyd, which ranks among the top 10 in the world.
A year before Hapag-Lloyd’s takeover talks with NOL, Chile’s CSAV had stunned the industry by ordering 12,000 teu ships, and then booking more on a long-term charter basis.
At that stage, only a handful of carriers — led by Maersk, Mediterranean Shipping Co and CMA CGM — had gone for vessels of that capacity. Furthermore, the Chilean line had no presence in the Asia-Europe trades when it embarked on an over-ambitious expansion programme that pushed it into the top 10 for a while, but almost destroyed South America’s largest shipowner.
Now under different management and scaled back to a much more manageable size, CSAV has been looking for partnerships that would help it cope with a container shipping industry that is evolving into a small number of powerful consortia.
Hapag-Lloyd is a member of the G6 alliance, along with Asian lines APL, OOCL, NYK Line, MOL and Hyundai Merchant Marine, that has been strengthening its partnership in the main east-west trades in response to the planned P3 vessel-sharing agreement of Maersk, MSC and CMA CGM. Both are awaiting regulatory approval before moving ahead with their plans.
How the combination of Hapag-Lloyd and CSAV will work out, assuming shareholders agree to the new structure, remains to be seen.
But in a stock exchange statement, CSAV said the aim was to become a shareholder in Hapag-Lloyd, with a 30% stake initially, rising to 34% after two planned capital increases, totalling €740m, to be competed within 12 months of the transaction.
The second fund raising will be part of Hapag-Lloyd’s stock market listing within a year of the merger.
CSAV also said that that the new company would become the world’s fourth largest container line, with combined carrying capacity of around 1m teu, annual cargo liftings of nearly 7.5m teu and yearly sales of almost $12bn.
Together, the pair expect to take some $300m of costs out of the network, while they also hope to upgrade their fleet. CSAV has 9,300 teu ships on order, while Hapag-Lloyd is in the process of taking delivery of a 10-strong series of 13,200 teu vessels.
The UK’s first quad lift shipping crane goes live
DP World London Gateway has become the first port in the UK to lift four containers at one time on its quay cranes, which doubles the amount of containers it can lift in one go.
The spreader is capable of handling four twenty foot containers or two forty foot containers at a time, this doubles the quay crane’s capacity for moving containers, which will increase efficiency and productivity for UK shippers.
Andrew Bowen, engineering director said: “This is an excellent example of DP World innovation at London Gateway. We’ve engineered a system that allows us to double the number of containers we move safely and quickly.”
“By introducing the tandem lift for two forty foot containers to our operations, we will be able to improve productivity that will allow vessels to be turned around faster and cargo to move on to its final destination more efficiently. The culture at DP World London Gateway encourages us to innovate and improve supply chains and we look forward to continuous improvements in the future.”
DP World London Gateway’s spreader is capable of picking up two forty foot containers or four twenty foot containers at a time.
“We have already enhanced the size of the cranes to be some of the largest in the world, capable of handling the largest vessels in the world. They also come with cutting edge automation technology,” said Bowen.
London Gateway opened on 7 November with the MOL Caledon calling as part of the SAECS service.
During the bad weather experience over the Christmas period, London Gateway’s land side operations remained open while other ports were closed. Four additional calls to London Gateway were made after poor weather caused ships to divert from their planned port of call. One of the ships, the Maersk Gudrun at 367 metres long, was the longest container ship to ever travel up the Thames, according to the Port of London Authority.