ContainersGreater China

Cosco outlines ‘dual-brand strategy’ for OOCL

Fresh from sealing the $6.3bn takeover of Hong Kong containerline OOCL last week Cosco has issued a Q&A on its website about how it intends to position the new acquisition, stressing that line will continue to have a separate identity and structure to its parent.

Cosco and OOCL will “maintain existing operational models and management channels”, Cosco stated in the briefing issued yesterday, adding: “COSCO SHIPPING Lines and OOCL will continue operating independently under the dual-brand strategy and seeking for synergy. The sales and customer service systems will remain unchanged to ensure service consistency. Meanwhile, back office functions such as cost control will be optimized step by step to improve operational efficiency and level of services.”

Cosco said no changes will occur among Ocean Alliance partners to the ports of calling, schedules and slots arrangement.

Under the dual-brand strategy, the two companies will operate independently with independent marketing strategies, Cosco stated.

Cosco claimed that the two brands would set rates independently, stating: “Based on adequate daily communications, both liners will make their own decisions on freight rates independently based on their own business strategy/policy and characteristics of their respective service products, and maintain their own pricing and approval systems respectively.”

The slot allocation model will remain unchanged in the future, implementing existing channels and processes. Both companies will be responsible for their own slot allocation, and will increase utilisation through an interchange mechanism to provide better slot guarantees to customers.

OOCL will continue to issue bills of lading independently while the two companies will continue to use their own container fleets with no changes to their appearance.

On finance, Cosco said the two companies will maintain independent accounting systems and adopt their own credit terms.

Cosco did hint that going forward it might change the shipping agencies OOCL uses.

The consolidated liner shipping fleet of Cosco and OOCL now stands at 2.76m teu, according to Alphaliner data, making the combined entity the third largest containerline in the world, surpassing CMA CGM’s 2.63m teu.

Cosco has cherrypicked some of OOCL’s brightest stars following its takeover of the company formerly controlled by the Tung family. Cosco Shipping Holdings announced last week the appointment of three OOCL executives to the management team of the company. Erxin Yao was appointed as VP for procurement, Stephen Ng as VP for commercial coordination and Steve Siu as chief information officer.

Cosco’s briefing about how it intends to position OOCL in the market – released just yesterday – was likely delayed as the company, China’s largest maritime conglomerate, has had to grapple with a cyber attack that hit its Americas operations hard for a week.

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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