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All Change, Part III

I've been saying it for a while that we live in interesting times in the liner shipping industry. Over- capacity and debt laden carriers have been the "elephant in the room" for the last decade or so. There are too many carriers trying to work on a global scale, for too few containers. The deluge of 18,000 TEU and above vessels in the past 12-18 months has only exacerbated the situation.

Things are finally starting to take shape and the domino's continue to fall. Hapag Lloyd and UASC got the final go ahead from the EU for their merger and today it was announced that Maersk Line will acquire Hamburg Sud from the Oetker Family. While no price has been disclosed at this stage, Maersk Line will move a comfortable way away from it's closest rival, MSC.

Assuming the deal goes through, Maersk Line will have captured 18.9% of the market against MSC's 13.6%. As I have also mentioned before, when there is even the slightest possibility of being overtaken, Maersk DNA kicks in and the drive to be the biggest carrier over-rides anything else.

Maersk Line has historically grown through a combination of organic growth (building or upgrading vessels) and acquisitions. In the acquisition category, they've not always had the best approach. The biggest purchases have been Sea-Land and P&O Nedlloyd. I worked at P&O Nedlloyd during the takeover and, excluding the fact that they probably overpaid for the company, it took several years to combine the infrastructure and IT systems. This is likely the reason that Maersk Line hasn't taken over any large competitors since 2005. When you get your fingers remember.

That said, Hamburg Sud could be a good choice as it comes with a good foothold in the North/South Reefer trades.

I doubt this will be the last update I write on the status of the industry because these are fascinating times!

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