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Business

Oetker group sells shipping business to Maersk

The world's seventh-biggest container operator, Hamburg Süd, has been sold to Danish conglomerate AP Moeller-Maersk. The German shipper has been squeezed by massive overcapacity and falling cargo prices.

Maersk Line didn't disclose the purchase price of Hamburg Süd when it announced the takeover on Thursday, saying it hoped to complete the deal by the end of 2017.

"The acquisition of Hamburg Süd is in line with our growth strategy and will increase the volumes of both Maersk Line and APM Terminals," Soren Skou, chief executive of Maersk Line and the Moeller-Maersk group said in a statement. The German shipping line and its Brazilian subsidiary Alianca were to continue as separate brands, he added.

Hamburg Süd is the world's seventh largest container shipper, operating 130 container vessels and employing about 6,000 people. It is owned by the German Oetker Group - a family-run conglomerate involved in shipping, banking, food and beverages.

According to data provider Alphaliner, Hamburg Süd accounts for 3 percent of global container capacity, with the ability to transport 600,000 containers. The value of its fleet is around $1.4 billion (1.31 billion euros), according to VesselsValue, another maritime data provider.

Hamburg Süd, which traces its roots back more than 100 years, previously explored a merger with German peer Hapag Lloyd, but talks collapsed in 2013 over pricing and who would run the merged entity.

Crippling overcapacity

If the deal is approved by regulators in a number of countries, Maersk's share of the global market will grow from currently 15.7 percent to 18.6 percent. Moreover, it will rejuvenate the Danish group's own fleet and help it boost its presence in global trade with Latin America.

"Hamburg Süd's strong presence in North-South trades makes it attractive to Maersk," said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. "Maersk sees growth in refrigerated cargo like meat products from Brazil and Argentina and bananas from Ecuador, and teaming up with Hamburg Süd will give it a bigger footprint in that part of the world."

While Maersk has bought or chartered vessels from distressed peers, its last full-scale acquisition was in 2005 when it bought P&O Nedlloyd.

The takeover comes during one of the most challenging times for the industry, with freight rates well below sustainable levels over the past two years. Container ships that transport 95 percent of the world's manufactured products are caught in one of the deepest ever downcycles, marked by anemic global trade and a glut of tonnage in the water.

Those conditions have kicked off an unprecedented wave of consolidation, with many of the 20 biggest operators either joining alliances or merging to weather the crisis.

Last year, for example, France's CMA CGM - the third-biggest player - bought Singapore's Neptune Orient Lines for $2.4 billion, and Japan's three largest shipping companies said in October they would merge their container operations.

Hanjin - South Korea's largest shipping company and once the world's seventh-biggest - filed for bankruptcy protection in August. This has left Hamburg Süd and Israel's Zim Integrated Shipping Services the only two shipping lines without a partner.

Watch video 01:00

Seoul jumps to Hanjin's rescue

uhe/sgb (Reuters, AFP, dpa)

 

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