Back-up plans readied ahead of Hapag-Lloyd sale

CONTAINER lines likely to be hit by the fall-out from another mega merger are already drawing up contingency plans.

Should Neptune Orient Lines buy Hapag-Lloyd, the impact on the liner shipping industry will be felt way beyond Singapore and Germany.

The two are members of different alliances, and lines from Japan, Hong Kong, Malaysia and South Korea would be caught up in the inevitable disruption and confusion. Talks are already being held between the two consortia about a back-up plan in the event of another round of consolidation.

Lloyd’s List understands that Hapag-Lloyd’s owner Tui will be sending out prospectuses, inviting offers to genuine potential bidders who have requested the sales documents, in the next few days. None was thought to be in circulation last week despite claims to the contrary.

Opinion is split about where Hapag-Lloyd will end up.

Some well-placed sources consider NOL to be the only serious contender. The chance to buy Hapag-Lloyd, ranked number five in the world, would be a rare opportunity for NOL to move into the world’s elite, say those who expect APL to emerge the winner.

Its liner shipping arm APL currently operates the world’s seventh largest boxship fleet, and a merger with Hapag-Lloyd would push the combination to third place, ahead of CMA CGM.

But just as the takeover of P&O Nedlloyd by AP Moller-Maersk sent shockwaves through the freight markets as long-established alliances had to be re-organised, so the same would be true in the event of a tie-up between APL and Hapag-Lloyd.

The former is a member of the New World Alliance. in partnership with Japanese line MOL and South Korea’s Hyundai Merchant Marine. The latter belongs to the Grand Alliance along with NYK, OOCL and MISC Berhad.

On the assumption that, if APL and Hapag-Lloyd are amalgamated, they will operate on their own, informal talks are now being held about merging the two consortia, which already work together on certain routes.

Although other names are being linked to Hapag-Lloyd, these are being taken less seriously than the NOL approach. Maersk Line’s refusal to rule itself out of the picture is seen by senior industry figures as a fishing expedition. The much-publicised Hamburg solution to stop Hapag-Lloyd falling into foreign hands is also thought by some have only an outside chance, but with Tui welcoming the intervention as a way of pushing up the price.

But top level industry executives also point out that deep-pocketed NOL has failed in past takeover attempts. The Singapore line bought US carrier APL in 1997, but lost out in a round of consolidation activity in 2005 when both P&O Nedlloyd and CP Ships were swallowed up. NOL was thought to have been interested in both but was out-bid by AP Moller-Maersk and Hapag-Lloyd.

If the frontrunner is successful this time, there would be compatibility, with APL strong on the Pacific and Hapag-LLoyd bigger in the Asia-Europe and Atlantic trades.

But insiders are also warning that Tui is under no obligation to sell Hapag-Lloyd, and could reject all bids if prices offered are not thought high enough

Lloyd`slist