PIL tipped as next box consolidation target

PIL tipped as next box consolidation target

Alphaliner is tipping Singapore’s Pacific International Lines (PIL) as the next candidate in container shipping’s current great wave of consolidation. The container analysts, noting that the eight carriers involved in the recent industry consolidation moves operated between 300,000 and 700,000 teu of vessel capacity.

Only four independent mid-scale carriers still remain, each with a global capacity share of between 1.5% and 2.8% only.

“However, three of the four, Yang Ming, Hyundai Merchant Marine and Zim are government-linked. Hence, these shipping lines are unlikely takeover targets to buyers outside their home countries due to their respective links to the Taiwanese, Korean and Israeli governments. The cash-strapped status of these three carriers will further deter potential buyers,” Alphaliner noted in its most recent weekly report.

PIL stands out, Alphaliner said, as the “only unencumbered candidate”. Moreover, its niche position, in particular on Africa-related trades, could make the carrier “an attractive target” for buyers keen on securing access to this emerging market, Alphaliner suggested.

“Unlike its counterparts, which can count on government backing, the Singapore-based PIL recently had to raise cash from asset sales and put up collateral to secure bank borrowing to pay off outstanding debt,” Alphaliner noted.

PIL, founded 50 years ago by the Teo family, has had to sell a couple of capesize bulk carriers at a loss this year as well as pledging shares it holds in box manufacturer Singamas in order to pay back some bonds this month. PIL has another tranche of bonds it must pay back in November next year.

PIL notched up a sizeable loss for 2016 and its debts now total $2.6bn, according to the analysts.

PIL has forged close ties with Cosco, who Alphaliner presume would be the most likely suitor for the Singapore line, once the Chinese conglomerate has managed to digest the acquisition of OOCL.

Spokespeople for PIL have yet to rely to Splash on whether or not the line would be put up for sale.

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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1 Comment

  1. Avatar
    Ed Enos
    July 19, 2017 at 6:11 pm

    I’ve been hearing for many years about Africa’s niche market status. Here again, its suppose to be an attractive component of this potential purchase. Yet the odd factors that create issues for shipowners, like piracy on both coasts (no small thing), would seem to scare buyers away. Nope.

    I have to believe there is something else there that creates the eagerness to get into this trade, though I don’t know what it is. I guess there truly is some growth actually occurring beyond a perceived level of ‘growth’.

    But then again, thats why I read Splash! To learn this stuff, HA!