Speculation over Orient Overseas Container Line (OOCL) being up for sale has seen the share price of its parent firm soar more than 20% since the start of the year. It closed up another 10 cents today on the Hong Kong Stock Exchange to finish at HK$38.75, a high not seen since October 2015.
With container consolidation continuing at an unprecedented scale whereby there will be no more than 10 global liners come 2018, increasingly the perceived wisdom is that to operate on a global scale a liner needs more than twice the 575,563 slots that comprise OOCL’s fleet today.
In its latest report, analyst Alphaliner mused: “COSCO Shipping and Evergreen have been touted as potential buyers for OOCL, although neither company has publicly expressed any interest in participating in a new round of liner acquisitions… OOCL has long been viewed as a prize catch due to its consistently profitable container shipping operations and strong yield management.”
OOCL spokespeople have consistently denied to Splash that the line is up for sale over the past five months. Today, a senior executive told this site: “Many of us have seen a number of changes in the industry landscape over the past year and during this period, many rumours on various topics have spread and speculative reporting have been made from time to time, including those about OOCL.
“While we appreciate the public discourse, we would not be in any appropriate position to respond to the rumours and speculations.”
In an ongoing poll carried on this site, OOCL was viewed as the second most likely next container candidate after Taiwan’s Yang Ming to consolidate.
“Recent moves by OOCL’s rivals to consolidate could prompt the Tung family, who controls some 69% of OOIL’s shares, to consider a divestment of its liner shipping activities as OOCL’s relatively small size, in comparison to its main rivals, could see it struggle to maintain its superior operating margins,” Alphaliner concluded in its latest weekly report.
Tung family might get hint from Peking to join force with COSCO shipping. Taiwanese carriers better merge themselves like the Japanese lines did.
There is the problem that Yang Ming, the liner shipping arm of the Taiwan side of the old China Merchants, is on one side of the Great Divide in Taiwanese politics and Evergreen is on the other.
The Japanese lines just belong to different keiretsus, descended from the old zaibatsus. The rivalry may be intense, but there is no political dimension to it.