As expected, Hapag-Lloyd AG and United Arab Shipping Company S.A.G. announce a merger

As forecasted in Logistics Management recently, ocean cargo container carriers Hapag-Lloyd AG and United Arab Shipping Company S.A.G. (UASC) have agreed to merge.

In our June magazine feature last month (State of Ocean Cargo: Cutting through the fog) we noted that in the wildly unstable ocean cargo carrier arena, three major consortia were fighting for market share…with some players simply hanging on for survival.

One of those players is Hapag-Lloyd AG

According to analysts the Paris-based consultancy, Alphaliner, the carrier had a particularly challenging first quarter with net loss earnings down by $48.8 million.

Not surprisingly, Rolf Habben Jansen, CEO of Hapag-Lloyd told shareholders and shippers that the new deal was likely to reverse that trend.

“This strategic merger makes a lot of sense for both carriers – as we are able to combine UASC’s emerging global presence and young and highly efficient fleet with Hapag-Lloyd’s broad, diversified market coverage and strong customer base. Furthermore it will give the new Hapag-Lloyd access to Ultra Large Container Vessels.”

Habben Jansen addes that after the successful integration of CSAV – which was concluded mid of 2015 – this transaction with UASC is another historic milestone for Hapag-Lloyd.

“The merger reinforces our position as a top 5 and one of the largest truly global carriers in liner shipping,” he said.

Shippers not surprised by the recent flurry of mergers.
“The carrier consolidation is a result of market saturation and is a natural progression to increase profitability among the carriers,” Andrea Morriera, international logistics manager for Orchard Supply Hardware in San Jose, CA.

She added that the carrier consolidation is a result of market saturation and is a natural progression to increase profitability among the carriers.

“I would consider these consolidations to be long overdue considering the counter parts in airlines and railroads have already responded to the unbalance of the amount of supply that drive the market rate down,” she added.