COSCO TAKE OVER OF OOCL COMPLETE BY END- JUNE: VICE CHAIRMAN

SHANGHAI (Reuters) - COSCO Shipping’s (601919.SS) planned acquisition of Orient Overseas Container Line (OOCL) is on track to be completed by the end of June, the company’s vice chairman Huang Xiaowen said on Tuesday.

COSCO is still answering questions from the Committee on Foreign Investment in the United States on the deal, and is also awaiting a number of domestic approvals, Huang told a press conference in Shanghai.

He said the deal needed U.S. approval as OOCL had some assets in that country. “Up to now we are quite confident to push forward this acquisition ... it’s progressing normally,” he said.

COSCO last year offered to buy Orient Overseas International Ltd (OOIL) (0316.HK) in a $6.3 billion deal that will see the Chinese shipping giant become the world’s third-largest container shipping line. OOCL is the main subsidiary of OOIL. The company said in July last year that the transaction would be completed by June 30 and the deal had already received approvals from European and United States anti-monopoly regulators.

The proposed deal is the latest in a wave of mergers and acquisitions in global container shipping that has left the top six shipping lines controlling 63 percent of the market and comes at a time when the industry is experiencing recovery after a lengthy downturn.

COSCO said last week it expected further growth in container shipping demand thanks to a continued recovery in global trade, after reporting that it had swung to a net profit of 2.7 billion yuan ($429.42 million) for 2017. Huang said the company was also keeping a close eye on rising trade tensions between China and the United States, trade between which currently contributes to about 15 percent of its cargo volumes.

Wang Haimin, COSCO’s general manager, said there was currently little evidence that the tensions were affecting cargo volumes but noted that the company had reduced its U.S. capacity slightly over the past few years as part of its restructuring.

“We will take appropriate action to protect our company’s market as well as the rights and interests of our customers,” Huang said.

DJIBOUTI PLANS NEW CONTAINER TERMINAL TO BOLSTER TRANSPORT HUB ASPIRATIONS

Djibouti is in talks with French shipping company CMA CGM to develop a new container terminal at an initial cost of $660 million as part of the tiny African country’s bid to expand into a sea and air transport hub for the continent.

Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority (DPFZA), told Reuters on Tuesday that the authority hopes to award the concession in July. It was also prepared to buy out DP World’s stake in an existing container terminal to end a row with the Dubai port operator and avoid arbitration, he said.

Djibouti’s strategic location has led the United States, China, Japan and former colonial power France to build military bases there.Its ports already serve as an entry point for cargo which is then sent by smaller vessels to ports along Africa’s eastern coast, but it is now seeking to become a sea-air trans-shipment hub for the entire continent.

To do this, Hadi said DPFZA was also planning to construct a $350 million airport and expand Air Djibouti’s fleet of cargo aircraft. The new container terminal project could break ground as early as September with construction expected to take 24 months, Hadi said, speaking on the sidelines of the Africa CEO Forum in Abidjan, Ivory Coast.

“We are going to build DICT, Doraleh International Container Terminal. This is a new plan,” he said. “We are in discussions with CMA CGM.”


The port authority was not in talks with any other potential partners, he said. Shipping group CMA CGM declined to comment. Once operational, Hadi said the port terminal would boast an annual capacity of 2.4 million twenty-foot equivalent units (TEU), but subsequent expansion phases would bring that up to 4 million TEUs. Fifteen percent of the project’s cost will be financed through equity. Of that, the DPFZA will contribute 85 percent, with its concession partner providing 15 percent. The rest will be raised via international institutions and banks.

“We are targeting trans-shipment,” Hadi said.

Meanwhile, Hadi said the port authority was ready to end a dispute with DP World over its cancellation of a concession contract for another facility, the Doraleh Container Terminal, by buying out DP World’s 33 percent stake. Djibouti ended the contract with the Dubai state-owned port operator last month, citing a failure to resolve a dispute that began in 2012.

DP World has called the move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“We are prepared to pay them their 33 percent of shares,” Hadi said. “There is no need for arbitration. We are going to buy their shares.”