The global logistics picture after COSCO buys OOCL

Cosco Shipping Holdings (COSCO) acquired Orient Overseas International Ltd (OOCL) for $ 6.3 billion, creating a formidable counterweight on the Asia-North American sea route.

Through the acquisition of OOCL by COSCO, the pair overcame A.P. Moller-Maersk and CMA CGM of France to become the shipping lines with the largest capacity in the Asia - North America service. This overtaking also created a new name with the largest number of ships in the Pacific Ocean.

The global logistics picture after COSCO buys OOCL

Cosco Shipping Holdings (COSCO) acquired Orient Overseas International Ltd (OOCL) for $ 6.3 billion, creating a formidable counterweight on the Asia-North American sea route.

Through the acquisition of OOCL by COSCO, the pair overcame A.P. Moller-Maersk and CMA CGM of France to become the shipping lines with the largest capacity in the Asia - North America service. This surpass also created a new name with the largest number of ships in the Pacific Ocean.

The deal could lead to an increase in freight rates on the Asia-America route, the second busiest route in the world, just after the Asia-Europe trip. At the beginning of this year, Maersk and Hyundai Merchant Marine Co. announced that they were also able to increase the shipping rates through annual price negotiations.

The Cosco-Orient Overseas duo will take the lead with the capacity to transport 77,208 containers per week on the Asia-North America route. On the Asia-Europe route, the duo will rank third, just behind Maersk and MSC.

After the biggest bankruptcy in the maritime history of Hanjin, shipping lines were forced to cooperate with each other, opening new carrier joint ventures to cope with difficulties. And after COSCO's acquisition of OOCL, the joint venture situation for the new shipping company will be as follows:
- 2M Alliance: Maersk, MSC
- THE Alliance: NYK, MOL, K Line, Yang Ming, Hapag-Lloyd (with UASC)
- Ocean Alliance: CMA CGM, Evergreen, joint venture OOCL & COSCO Shipping

Shippers are now complaining that these shipping alliances limit the flexibility of choosing suppliers, thereby increasing their Supply Chain costs. And analysts point to a serious decline in direct port-to-port routes.

“These new alliances and development directions will affect both shippers and carriers, less direct shipping routes mean more port transshipment and an increase in overall logistics costs. "