Business

Cosco Shipping's ambitions unlikely to significantly hurt Singapore ports

The gigantic ambitions of China's Cosco Shipping Holdings - underscored by its massive US$6.3 billion (S$8.7 billion) bid to buy smaller rival Orient Overseas International (OOIL) - is unlikely to affect the ports in Singapore in a significant way, said analysts.

Both container shipping companies already see Singapore as one of their main transshipment hubs for the region, noted Ocean Shipping Consultants director Jason Chiang.

Cosco has a stake at the Pasir Panjang Terminal through its joint venture with PSA.

Cosco said it will pay shareholders of Hong Kong's OOIL HK$78.67 (S$14) a share in cash for the acquisition, a 31 per cent premium over the stock's last closing price.

The Tung family, which founded Orient Overseas Container Line in 1969, has accepted the offer, which still needs regulatory approval and consent from Cosco's investors.

On completion of the deal, Cosco will hold 90.1 per cent of OOIL, while Shanghai International Port will have a 9.9 per cent stake.

The move will catapult the Chinese group to become the world's No. 3 shipping line, surpassing France's CMA CGM, while closing the capacity gap with top players Maersk Line and Mediterranean Shipping.

CMA CGM bought over Singapore's Neptune Orient Lines last year.

While the deal will likely see Beijing take a firmer hold of Hong Kong's transport hub - both established and key transshipment centres in Asia - Mr Chiang believes Singapore will still retain its status as an important shipping hub for South-east Asia.

"Hong Kong competes more with Shenzhen as the North-Asia hub, while Singapore competes with Malaysia in South-east Asia," he said. - THE STRAITS TIMES

FOR MORE, READ THE STRAITS TIMES TODAY

FinanceChinaSingapore