The government of China has reportedly ordered the merger of two of the country’s largest state-owned shipping companies – China Ocean Shipping Group (Cosco) and China Shipping Group – to try to jointly tackle a slump in the industry, according to South China Morning Post.
According to an executive from Cosco Group, the two companies were urged last week to come up with a preliminary merger plan within the next three months.
The companies will form a 5-member working group to create the merger plan. Cosco will have two representatives in the group, while China Shipping will appoint three other members. China Shipping’s Chairman Xu Lirong will preside over the group.
The two groups are mulling the possibility of pooling their container shipping business into one entity, the Cosco executive was reported as saying.
Cosco and China Shipping control a total of five listed companies in Shanghai, Shenzhen and Hong Kong. All of the subsidiaries applied for a share trading halt, which came into force Monday, August 10.
The merger between Cosco and China Shipping is seen as China’s response to global shipping alliances and their economy-of-scale business model.
World Maritime News Staff