New wave of mergers hits ocean carriers

By Staff -- Logistics Management, 9/1/1998

For the past two years, the maritime industry has been hit by a wave of mergers and consolidations. That trend is continuing without letup, as major carriers on three continents announced two buyouts and a joint venture in a span of just seven days. These included the following:

* Columbus Line/Alianca--On July 24, Columbus Line's parent company, Hamburg Sud, announced that it had agreed to purchase Brazil's Empresa Navegacao Alianca S.A., Columbus Line's partner in South America. Terms of the sale, which includes the Brazilian carrier's container and bulk shipping activities, are confidential. Hamburg Sud officials say Alianca will continue to operate under its own name and maintain its Brazilian-flag status.

The acquisition of Alianca is only the latest step in Columbus Line's drive to beef up its presence in South America. In May, Columbus launched its "Bullet Pass" service, which slashed transit times between Miami and ports in Brazil, Argentina, and Uruguay. The carrier also added new port calls on that route as well as on its U.S. Gulf-East Coast South America service. Less than two weeks later, Alianca, Columbus, and P&O Nedlloyd announced a "strategic agreement" covering vessel integration, cross-charters, terminal cooperation, and other cost-cutting activities.

* Evergreen/Lloyd Triestino--Taiwan's Evergreen Group on July 31 signed an agreement to purchase Lloyd Triestino di Navigazione SpA, part of Italy's state-owned Finmare Group. The sale, part of the Italian government's transport privatization initiative, should be completed this month.

Evergreen and Lloyd Triestino for several years have operated a joint service from the Pacific Northwest to the Far East and the Mediterranean. They also cooperate on a Far East-Mediterranean-North Europe service and a Singapore- Australia route. The acquisition will give the Taiwanese carrier a stronger presence in Lloyd Triestino's traditional markets in the Mediterranean, Africa, and the Middle East. The merger also will help Evergreen acquire local expertise to manage the multi-user container terminal it is building at Taranto in southern Italy.

* TMM/Lykes/Ivaran--The arrangement between Mexico's Transportacion Maritima Mexicana (TMM) and CP Ships merges the container services of TMM and CP subsidiaries Lykes Lines and Ivaran Lines. The plan, which the carriers refer to as a "joint venture," will bring together 40 ships and a combined annual throughput of more than one million TEUs (twenty-foot equivalent units). Combined annual revenues will exceed US $1 billion. The partners will retain ownership of their vessels, but will pool other assets, liabilities, and contracts.

The three carriers' services will be "fully integrated," offering tremendous potential savings in operational costs, said Ray Miles, CEO of CP Ships, in an interview announcing the plan. The three carriers will continue to sell space under their own names--an unusual strategy that CP Ships has successfully employed with Canada Maritime, Cast, and Lykes. "We just believe multiple branding is a better way of generating revenues," said CP Executive Vice President and Lykes CEO Frank Halliwell, who will be president of the new venture.

The complex deal, with its numerous interlocking services, will incorporate members' existing relationships with other carriers. TMM may be the champion in this regard; it is part owner of Colombian carrier Flota Mercante Grancolombiana and Spain's Compania Trasatlantica Espanola. TMM also cooperates with APL Ltd. in the Pacific, with Ivaran Lines in the U.S. Gulf-East Coast South America lane, with Hapag Lloyd in the North Atlantic, and with Lykes Lines and CP's other subsidiary, Contship Containerlines, in the U.S. Gulf-Mediterranean trade. Contship will give that route to the new company but has no further participation in the agreement.