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Chinese shipper eyes M&As in 2012

(Shanghai Daily)

08:52, December 08, 2011

China Shipping Co, the country's second-biggest shipping line, said there will be merger and acquisition opportunities next year as shippers struggle to tackle industry over-capacity amid sluggish economic growth.

"The industry has entered the winter season," Li Shaode, chairman of the company, told a forum in Shanghai yesterday. "Companies are facing a tough business environment. Rising costs, especially oil, and declining rates have put many shipping companies under pressure."

Shipping lines should work together more closely to consolidate resources to counter the tough times, Li said, adding that China Shipping has a designated team to look out for M&A opportunities.

But he said that as the sluggish situation will last the "most important task now is to improve our own business and survive the winter."

After a brief recovery last year the shipping industry corrected in 2011 as capacity has exceeded demand on a slowing world economy.

The Baltic Dry Index, a measure for dry bulk charter rates and a gauge for the world economy, has sunk below the average level that prevailed in the first quarter of 2009 when the world economy was swarmed by the sweeping financial crisis in 2008.

Mitsui OSK Lines, Japan's largest shipper by market value, and partners including AP Moeller-Maersk A/S said on Tuesday they will pool about 50 very large crude carriers to cut costs. Last week container lines Mediterranean Shipping Co and CMA CGM SA formed a tie-up.

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