Liner Shipping Case Study

1766 Words 8 Pages
To start with, a proper definition given for liner shipping would be: “the service of transporting goods of high-capacity, ocean-going ships that transit regular routes on fixed schedules” World Shipping Council (2017). Nowadays there are almost 400 liner services in operation, most of them providing weekly departures from different ports. Liner vessels in the form of containerships and RORO ships carry about 60 percent of the merchandise by value moved internationally by sea each year. There to here in a container has offered many advantages in the sector of transportation in means of speed, safety and efficiency in general.
Many containerized scheduled liner services happen every day at seaports from countries all around the world, just
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An acquisition occurs when a buying company obtains more than 50% ownership in a target company. Mergers and acquisitions are usually done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to please shareholders and create extra value for the company.
The economic rationality for mergers and acquisitions is rooted in the objective to size, growth, economies of scale, market share and market power. Other motives for mergers and acquisitions in liner shipping relate to gaining instant access to markets and distribution networks, obtaining access to new technologies or diversifying.
As mentioned before, in this assignment will be illustrated the case of the COSCO acquisition of OOCL. It will examine possible future situations of both companies, in comparison to previous situations and how the whole process can change the game in the container liner shipping
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Global trade perhaps grew 2.2% last year (2016), the slowest pace since 2009. Taking this as an advantage, COSCO proceeded by making an offer to the OOCL’s parent company OOIL. COSCO Shipping Holdings Co Ltd has offered to buy Orient Overseas International Ltd (OOIL) for HK$49.23 billion ($6.30 billion), in a deal that will see the mainland China group become the world’s third largest container liner, in terms of global container shipping market share, increasing the pressure on its biggest competitors, Denmark’s Maersk and Switzerland-based Mediterranean Shipping Company. The deal was announced a week after China’s President Xi Jinping visited Hong Kong as the former British colony marked the 20th anniversary of the handover. Such a deal could take up to 6 months to be approved. The shareholders of Orient Overseas have accepted COSCO’s offer at HK$78.67 a share. The family of Tung Chee-Hwa, the first chief executive of Hong Kong, has about 69% of the shipping line. COSCO Shipping Holdings and Shanghai International Port Group (SIPG) who put in the offer, when completed, COSCO will hold a 90.1% stake and SIPG

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