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Berth right: NOL-APL acquisition’s domino effect on alliances

With last month’s EC (European Commission) approval the remaining step in the privatization of NOL-APL is now for CMA CGM to buy outstanding shares (up to 90%) of NOL’s total stock. Last week the French shipping conglomerate purchased 78% of NOL in a $2.4 billion cash deal with state-controlled Temasek Holdings of Singapore. Pledging to move its Southeast Asian operations from Port Kelang and Tanjung Pelepas Malaysia to new mega berths at PSA’s Pasir Panjang Terminal, CMA CGM has also agreed to relocate its Asian headquarters from Hong Kong to Singapore. The joint venture called CMA CGM-PSA Lion Terminal Pte. Ltd. (CPLT) will begin operating later this year as containers and equipment is transferred over. As part of its concession to the EC and Chinese regulatory bodies CMA CGM has withdrawn APL from the G-6 alliance and plans to form the new “Ocean Alliance” in 2017 with COSCO, OOCL and Evergreen. Together the Ocean Alliance would control 1,123 container ships with 5,485,483 TEU of capacity and an additional 104 vessels and 1,290,174 TEU on order (extrapolation of Alpha Liner data for June 2016). OOCL will also be forced to withdraw from the G-6 all but destroying the alliance’s infrastructure. Reformation of the remaining 4 carriers with the addition of K Line, Yang Ming, Hanjin and possibly UASC will form “The Alliance” which is scheduled to begin operations in 2017. It’s interesting to note that APL no longer appears on the Alpha Liner register of container carriers in their June 2016 calculation of tonnage and ranking. What does this mean for the brand identity of the line going forward? Prior to the actual purchase (December of 2015) Reuters reported that CMA CGM would consider listing APL shares on the Singapore exchange at some future point but current plans to delist the line after the July 18th deadline for share purchase will remove the carrier from public trading. The APL website herald’s news of its new structure and CMA CGM executives indicate there is no plan to consolidate operations or move the U.S. headquarters from Scottsdale Az. Currently APL strives for 100% on time performance (against a Q-1-16 average of 88%) for all Asian services calling GGS (Global Gateway South Los Angeles) They also claim that timely cargo availability at GGS is at 98% for the same period. CMA CGM expects great things from its purchase of APL with improvements in ocean transit, terminal velocity and the combined strength of brand recognition for both carriers. The formation of new consortiums in the coming year will bring challenges to both the “Ocean Alliance” and “The Alliance”. Trading partners, all of whom have their own joint ventures in ships, terminals and equipment will have to work together to share resources and draw on each other’s strengths to survive.
Matt Guasco
Matt Guasco

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