The world’s largest sea carriers are competing on the world stage.
COSCO’s plan to surpass Maersk, the world’s largest shipping line, is no longer a secret. Over the past two years, since the Chinese government merged China Shipping with China Ocean Shipping to form the current company Cosco Shipping, the company has taken a number of ambitious steps to invest and expand the business. Many analysts believe that COSCO’s goal of dominating the shipping industry will be reached within the next decade.
COSCO is far more efficient in managing and operating its assets and business than China Shipping has ever been. China has a huge influence on world trade and strives to take a leading position in it. Naturally, a government-funded Chinese carrier would have similar ambitions. The company has one goal – to become number one in the world, and this goal includes a victory over Maersk. The carrier is challenging Maersk, and its investment in recent years confirms that the goal is more relevant than ever.
The acquisition procedure by COSCO OOCL was completed this year. With the acquisition of the eighth largest shipping line, OOCL, COSCO has officially overtaken CMA CGM as the third largest container shipping line in the world.
Earlier this year, COSCO acquired a terminal in Belgium’s second largest port, Zeebrugge. While this was the company’s first strategic entry into the Northwest European market, it actually marked the latest acquisition of a Chinese carrier in Europe in recent years.
Previously, Chinese shipping and port companies were relatively small powers in a world dominated by giants such as A.P. Moller-Maersk and Hutchison Ports. But in 2016, Beijing created a national giant by merging China Ocean Shipping and China Shipping Company into a growing group that includes a shipping line of the same name, a port operator and other shipping companies. The preparation of such a powerful player in the freight transportation arena is also part of Beijing’s plans to connect China with Europe by sea, rail, road, and pipelines.
To underscore China’s resolve, Chinese companies have acquired stakes in 13 European ports over the past decades. Chinese state-owned companies currently own about 10% of the total ports in Europe.
Maersk is now within reach of COSCO, the Danish carrier must remain vigilant, especially with new orders placed by a competitor.
COSCO expects to complete an order of 374,534 TEU, almost four times more than Maersk’s order of 96,000 TEU. After both orders are completed, Maersk’s fleet will be 2.37 million TEU, up 11% from COSCO’s 2.13 million TEU (a difference of just 240,000 TEU).
And, perhaps, the goal of bypassing the MSC will not require super efforts. Once the orders are filled, COSCO will be just 0.2 million TEU (or 6% to 7%) of that coveted second target, according to Crucial Perspective.
But the Chinese carrier will still have to work hard before COSCO can get even closer to Maersk, if not push it off its pedestal.
COSCO has no shortage of investment, especially with the support the carrier is receiving from the Chinese government. And there are plenty of investment opportunities for the company.
Perhaps the question should be whether she can walk that path.
It is one thing to make an effort to obtain investments, but quite another to make investments profitable. Over the past decade, the industry has seen many operators build up port capacity and then struggle to use it to its full capacity. And given this trend, this is likely to be one of the biggest challenges for COSCO.
The carrier is growing thanks to investments in terminals and railways and is gaining new sources of income, but there are still obstacles ahead.
Other operators, not only Maersk and MSC, will be watching COSCO. Political obstacles may also arise when governments of different countries begin to refuse to sell objects of interest to Chinese companies for fear of Chinese dominance. The ongoing tariff war could also affect their plans.
Without a doubt, Maersk is fully aware of the problem of competition and will be on the lookout. While this isn’t the first time the Danish company has been challenged, COSCO will be a much bigger threat than all the other competitors before.
Carrier Maersk has long dominated the shipping industry, and its many acquisitions and successful deals have played a large part in maintaining its dominant position in the market.
Needless to say, Maersk and MSC are not going to give up easily.
Maersk has traditionally been a force to be reckoned with by everyone in the shipping industry. And he is not going to give up his dominance. MSC has long sought its second position and has gone through a major transformation over the past 10 to 15 years, catching up with Maersk. It will continue to evolve to catch up with Maersk.
Maersk is committed to making end-to-end supply chain solutions, judging by the creation of Sealand and the merger with Damco. One option is likely to be to expand the overall portfolio of services to offer customers as many options as possible.
It is obvious that COSCO is making great efforts to achieve its goal. COSCO has the advantage of being the world’s largest market, which means there is great potential for growth, especially if the company continues to build infrastructure. COSCO overtook Maersk as the top container shipper for the first time in Q3 2017, according to Alphaliner, with the Chinese carrier posting 5.49 million TEUs, ahead of Maersk at 5.26 million TEUs.
Some, however, attribute this result to the aftermath of the Petya cyberattack, which temporarily crippled Maersk’s operations. One of the biggest constraints and threats facing the shipping industry is cyber attacks. The ransomware attack on COSCO operating systems and the more serious Petya virus attack on Maersk are a great reminder of the weaknesses in their systems, due to which detractors can cause serious damage to companies.
If COSCO is serious about becoming the world’s largest carrier, it will need to invest more in its security system. The ambition and size of the company continues to make it an extremely attractive target for cyberattacks. Otherwise, most likely, they will be subject to new attacks. The same applies to carrier Maersk, which is unlikely to want to relive its unfortunate experience with the Petya virus.
Currently, the podium of the largest representatives of the container transportation business is confidently held by the Danish giant Maersk. The second place rightfully belongs to the Swiss shipping company MSC. And the third place is now occupied by the ambitious Chinese COSCO, with might and main advancing on the heels of eminent old-timers.
China Ocean Shipping Company (COSCO) was founded on April 27, 1961. In 1993, the company became a $17 billion corporation. In February 2016, COSCO Group merged with China Shipping Group to form China COSCO Shipping. Its headquarters is located at Ocean Plaza in the Xicheng District of Beijing. The company owns 1,114 vessels, including 365 bulk carriers, a container fleet with a capacity of 1,580,000 TEU and a tanker fleet of 120 vessels. Annually transports more than 180 million tons of cargo. COSCO Group is engaged in cargo transportation, logistics, shipbuilding, ship repair, trade, and financing. COSCO consists of 7 registered companies and has more than 300 subsidiaries at home and abroad. The cumulative sales amounted to 17 billion US dollars (2004). In April 2016, COSCO bought a 51% stake in the Port of Piraeus (Athens, Greece). In July 2017, COSCO spent over US$6 billion to acquire its Hong Kong competitor Orient Overseas (International) Limited and continues to scale up its expansion.
Maersk is a Danish company founded in 1904, specializing in maritime freight transport and port terminal services. The company’s headquarters is located in Copenhagen, and subsidiaries and offices, which employ about 88,000 employees, are located in more than 135 countries around the world. For 2018 Maersk is the world leader in the field of container transportations with a market share of 18%. The company’s annual revenue in 2017 was US$35 billion.
Mediterranean Shipping Company S.A. (MSC) is a private shipping company based in Geneva, Switzerland. This is the second company in the world (after Maersk) in terms of container ship capacity. At the end of November 2017, the company operated 506 vessels with a total capacity of 3.14 million TEU. The company was founded in 1970 in Naples by the Italian sailor-captain Gianluigi Aponte.
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Based on materials from http://www.icontainers.com/ and data from open sources.