American commission confirmed the merger of Cosco and CSCL

US Federal Maritime Commission (FMC) approved the merger of the China’s largest shipping companies China Ocean Shipping Company (Cosco) and China Shipping Container Lines (CSCL). FMC Commissioner William Doyle confirmed that the companies planned to merge and had already received from the Commission the recommendations for joint operation.

Together with the vice-manager of the United States Maritime Administration Michael Rodriguez administration, Doyle visited Asia for bilateral consultations with the Chinese delegation headed by Ven Menyun, deputy head of the Ministry of Transport of China. The American commissioner described the meeting held in Suzhou as quite successful.

«We discussed many important issues, including the recent explosion in the port of Tianjin, the excess capacity on maritime trade lines, fares, Cosco and CSCL merger and China’s pilot program of free trade zones,» reported Doyle in his official statement.

US delegates also visited Shanghai, where they met with the representatives of both companies, including General Legal Counsel CSCL Ye Hongyun and Cosco Managing Director Wang Haimin. The parties discussed the changes after the merger in the composition of alliances which Cosco and CSCL were members. Details of the meeting were not disclosed.

Supposedly, the CSCL can follow Cosco in CKYHE alliance, which also includes the companies «K» Line, Yang Ming, Hanjin Shipping and Evergreen Line. In its turn, Cosco can join the Ocean Three Alliance, which includes in addition to CSCL, CMA CGM and United Arab Shipping. Also, any other scenario could be implemented. The main thing, according to Doyle, is not to cause harm to fair competition and not infringe the rights of the carriage customers.

Doyle notified good news to Cosco representatives: FMC general voting released the European division of the company from the obligation to wait for 30 days before tariff changes as required by the US law «On the Controlled Carriers». According to the law, any carrier controlled by a foreign government, and willing to change its tariffs in the United States, must provide 30 days to FMC to check whether its new tariffs are not unreasonably low, which will undermine fair competition. The inability to quickly change the tariffs is very inconvenient for transport companies. The cancellation of thirty-days check is a sign of confidence in the company.

As a result of the merger, Cosco and CSCL will occupy the fourth place in the list of the largest container carriers in the world. We remind that the first place is occupied by the company Maersk Line, Mediterranean Shipping and CMA CGM are ranked the second and the third, respectively. With regard to the carriage of goods between Asia and the US, here the united company will have no superiors.

One cannot say that the companies are dissatisfied with their current position in the ranking, where they occupy the sixth and the seventh places. But in the third quarter this year, Cosco reported $ 270 million of net loss, as in the case of CSCL, this amount was $ 160 million from the beginning of the year. The Chinese government is determined to prevent the companies to continue losing their money. In addition, the merger will be effective step to combat the alleged corruption in the companies management.

"Both companies are seeking to make the merger as transparent as possible, William Doyle says. Of course, the door of our commission are always open for them. Next month, we planned to meet in Washington. The Chinese delegates are devoured by the process — it is a pleasure to work with them. "