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Hapag-Lloyd deflects Qatar concerns, vows ‘smooth transition’ with UASC

Hapag-Lloyd deflects Qatar concerns, vows ‘smooth transition’ with UASC

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German containerline Hapag-Lloyd has issued a statement today vowing that its integration with United Arab Shipping Co (UASC) is proceeding apace and will likely be concluded this October.

The ongoing diplomatic spat between Qatar and its neighbours in the Gulf has led to some analysts to question whether the standoff could also make life difficult for the Hamburg line which is trying to absorb UASC into its global network having just sealed the merger with the Middle Eastern line.

Analysts at Alphaliner, for instance, questioned whether the diplomatic impasse in the Middle East could hinder Hapag-Lloyd’s urgent need for a cash capital increase via a rights issue.

State-backed Qatar Holding which, since Hapag-Lloyd’s merger with UASC on May 24, now holds a 14.4% share in the German ocean carrier.

Qatar Holding and Saudi Arabia’s Public Investment Fund have earlier agreed to backstop 50% of the planned $400m cash capital increase through a rights issue in Hapag-Lloyd that was supposed to take place within six months of the closing of the merger.

“It is currently unclear how the Hapag-Lloyd shareholders will resolve the complications arising from the diplomatic spat involving Qatar and its erstwhile Middle Eastern partners in UASC,” Alphaliner stated, pointing to Hapag-Lloyd’s total debt that now exceeds $8.3bn.

Hapag-Lloyd, however, is adamant that it will manage a “smooth transition”, it stressed in a release today.

“We will not only merge our offices across the world, synchronize our IT systems and bring together our fleets, but we will also merge our sales activities and booking channels to offer you a combined service as soon as possible,” the German line stated, noting how by the middle of next month the first joint sailings will commence under Hapag-Lloyd bills of lading only.

“We are confident that we will be able to ensure complete integration by Q4 2017,” Hapag-Lloyd stated. The German line does have recent prior experience of containerline integration, having merged with South America’s CSAV a couple of years ago.

Hapag-Lloyd also today gave details of how its global operations will change with the inclusion of UASC under its wing. The German line will add a fifth regional centre in the UAE to go alongside its existing regions, namely North America, Latin America, Europe and Asia. The new Region Middle East, headquartered in Dubai, will also control the line’s South Asian business and most of its Africa coverage.

The German line has already warned that some 1,300 employees are likely to be let go as the integration proceeds.

Meanwhile, a host of containerlines have now cancelled calls to Qatar in the wake of the ongoing cut of trading and diplomatic ties between the 2022 football World Cup host and many of its neighbours.

 

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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