COSCO will put Long Beach terminal up for sale

Cosco ship carrying cargo past sail

July 9, 2018 - COSCO Shipping will put Long Beach Container Terminal up for sale through a U.S. trust fund in order to merge with OOCL, the terminal's owner, according to various reports.

The sale is meant to appease U.S. regulators concerned with a Chinese state-owned enterprise owning a major import facility.

The Committee on Foreign Investment said it has no "unresolved national security issues" related to the takeover thanks to the divestment, The Wall Street Journal reports.

The divestment makes it official: with no further roadblocks, COSCO will begin its takeover of OOCL's operations to become the world's third largest ocean carrier by container capacity.

It's not just capacity COSCO is buying: OOCL is one of the shipping lines with the most reliable customer service, a pipeline of use cases for new technology like artificial intelligence and a container terminal in Kaohsiung, Taiwan. 

The question now is who will buy OOCL's other terminal at the Port of Long Beach?

The Port of Long Beach is a desirable terminal destination for any major container line. The port has a throughput of more than 7 million TEUs each year, handling roughly one-fifth of total U.S. trade volumes. In its partnership with the Port of Los Angeles, the two facilities are effectively the tenth-busiest port metropolis in the world.

Various shipping lines already have a stake in four of the six Long Beach container terminals: MSC has a majority stake in Pier T; a K-Line subsidiary operates Pier G; and COSCO owns Pier J. OOCL's Long Beach Container Terminals occupies Pier F, and would be sold, in theory, to another major suitor or global terminal operator.

Maersk Line emerges as a potential top suitor to by the terminal. When Hanjin was selling its assets to escape bankruptcy, the world's largest carrier and 2M alliance partner was seen as a natural fit.

But other, smaller carriers looking to make waves on a global scale may also be interested. Hyundai Merchant Marine was also a strong suitor at the time of Hanjin's demise and has shown interest in being a big player on East-West trades.

Ocean Network Express, Evergreen Marine, CMA CGM, or even terminal operators already in Long Beach like SSA Terminals should not be discounted, either.

Source: Supply Chain Dive