Hapag-Lloyd gets EC competition green light to complete UASC merger

Excerpt of article published in Loadstar,

The European Commission yesterday approved the merger between Hapag-Lloyd and UASC – subject to the latter withdrawing from the North Atlantic trade.

A Hapag-Lloyd spokesman told The Loadstar the company was “delighted” with the news.

With a combined capacity of 1,478,236 teu, the merger will make the new entity the fifth-largest ocean carrier, well ahead of Evergreen, at 991,470 tea, and marginally behind China Cosco Shipping, which has a capacity of 1,572,335 teu.

An EC statement said: “The clearance is conditional on the withdrawal of UASC from a consortium on the trade routes between Northern Europe and North America, where the merged entity would have faced insufficient competitive constraint.”

EC competition commissioner Margrethe Vestager added: “European companies rely on container liner shipping services for their transatlantic shipments. It’s very important that the markets remain open.

“The commitments offered by Hapag-Lloyd ensure that the takeover will not lead to price increases on the routes between Northern Europe and North America.”

Mr Habben Jensen said, during the company’s third-quarter financial presentation on 14 November, that the rationale for the merger was improved scale, providing access to UASC’s “young and fuel-efficient fleet” of 61 ships, including ULCVs.

He explained that to be competitive, Hapag-Lloyd would have needed “significant investment” in ULCVs, but with UASC’s fleet of six 18,000-teu and eleven 15,000-teu ships, there was now no need. Fleet expenditures had “basically been pulled forward”, he said.

He estimated that synergy savings from merging the container lines would be $435m a year from 2019.  The majority will come from network optimisation and reduced overheads, including the consolidation of corporate and regional headquarters, the rationalisation of country organisations and overhead reductions such as operations, marketing and audit. At the end of September, Hapag-Lloyd had 9,397 shore-based and seafaring employees. At the time of its takeover of CSAV’s container business, the combined head count was over 11,000.