Tuesday, August 11, 2020
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Two Shipping Giants Might Merge

By Richard Knee, Maritime Reporter

A possible merger of two cargo-shipping titans whose container ships call at the Port of Los Angeles has maritime unions fearing job losses, and exporters and importers worrying about service-quality levels, but no one contacted for this story has said definitively whether they would ask government regulators to block the deal.

Ownership consolidation in the shipping industry has been occurring over the past several decades. And while vessels in most of the world’s trade lanes are still sailing with less-than-full loads, the concentration of industry control into fewer and fewer hands increases the ease and likelihood of market manipulation.

France’s CMA CGM and Singapore’s Neptune Orient Lines Ltd. announced jointly on Dec. 6 that the former would acquire the latter if APLantitrust authorities approve it. Neptune Orient Lines’ container ships operate under the APL brand; APL used to stand for American President Lines, the Oakland-based company that Neptune Orient Lines acquired in 1997.

CMA CGM also used to be two shipping lines: Belgium-based Compagnie Maritime d’Affrètement and the French carrier Compagnie Générale Maritime.

Neptune Orient Lines’ acquisition of APL included U.S.-flagged and -crewed ships, which Neptune Orient Lines/APL continue to operate under the 19-year-old Maritime Security Program enabling them to haul U.S. government-impelled shipments. At least one union, the International Organization of Masters, Mates and Pilots, based near Baltimore, fears that CMA CGM would remove some or all of the nine vessels that Neptune Orient Lines/APL has enrolled from the program.

Representatives from both companies were silent on the question, as they were on whether they could guarantee that a merger would not result in a deterioration of service quality, though CMA CGM did say it planned to keep the APL brand alive.

International Organization of Masters, Mates and Pilots president, Don Marcus, said there are 60 Maritime Security Program-enrolled ships. U.S.-flagged vessels carried about 90 percent of the government-impelled cargo during the Afghanistan and Iraq wars, from which “APL made a fistful of dollars,” he said. “It’s unknown if CMA CGM would have a commitment to the MSP,” he said.

The International Organization of Masters, Mates and Pilots “very well might” launch or join an effort to persuade regulators to prevent CMA CGM from swallowing Neptune Orient Lines, he said. The International Organization of Masters, Mates and Pilots is part of a maritime labor alliance with the National Marine Engineers Beneficial Association, the longshore and “a few other” unions, he said. Neither of the longshore unions could be reached for comment.

There’s an inter-union spat involved as well. Marcus said APL recently informed the International Organization of Masters, Mates and Pilots that it was replacing one Maritime Security Program-enrolled ship with one whose officers and crew had different representation.

Representatives of two exporter-importer organizations said they were monitoring developments surrounding the proposed merger but neither said whether his group would fight it.

The National Industrial Transportation League is “watching developments in the liner industry with great interest,” President Bruce Carlton said. Based near Washington, the league lobbies on behalf of U.S. producers and retailers, which rely on all transportation modes to move their goods.

“There are no plans at the moment to organize a campaign against this or any other merger or acquisition, but we will be looking at measures of market share, market concentration, and so on with an eye on any potential negative impacts on competition,” Carlton said.

Peter Friedmann, executive director of organizations representing exporters and importers of agricultural products, and West Coast freight intermediaries, said those companies “benefit by competition and choices” but acquisitions are normal in the existing dynamic business environment.

Friedmann, who is based in Washington, has played a major role in shaping regulations governing the liner shipping industry. The groups he heads are the Agriculture Transportation Coalition and the Pacific Coast Council of Customs Broker and Freight Forwarder Associations.

Representatives for the shipping lines sent terse e-mails that essentially amounted to “no comment.”

Neptune Orient Lines spokeswoman Pamela Pung said that company “at the moment” had nothing to add to an announcement to the investment community confirming that merger talks were in progress.

CMA CGM spokesman Tristan Bourassin said it was “not possible to provide this level of operational details at such an early stage of the process. Further communications will be made in due time.… CMA CGM attaches strong importance to its quality of service and expects to enhance it by drawing upon the best practices of each group.”

Richard Knee is a freelance journalist in San Francisco. He writes extensively about the freight sector.

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