CP Ships plays down chain reaction after Maersk-P&ONL takeover

CP Ships plays down chain reaction after Maersk-P&ONL takeover    Ray Miles, chairman of CP Ships, has played down the prospect of a chain reaction of mergers and takeovers after last week’s announcement of the takeover bid of A.P. Moller for P&O Nedlloyd.
   “There would be only four or five in the top 20 that would be candidates” including A.P. Moller and P&O Nedlloyd, Miles told a New York meeting of investment analysts May 12, referring to the largest container shipping lines.
   “The top 20 have consolidated mostly through organic growth,” he said. This means that the largest carriers have expanded faster than smaller players, gaining a bigger share of the global market.
   Miles agreed that the A.P. Moller-P&O Nedlloyd merger is a significant industry factor that will make carriers assess their future strategies.
   “It will make a lot of the other players think ‘are we sub-scale?’ and, therefore, do they need to think about merger and acquisition activities to increase their scale?” Miles said.
   Commenting on rumors that China Shipping is planning a takeover of CP Ships, Miles said: “I have not talked to them for years.”
   For years, CP Ships has predicted increasing consolidation in container shipping, which it regards as a fragmented industry. But Miles told the New York meeting that there has been “little consolidation in recent years, despite lots of rumors.”
   Miles also believes that the takeover is likely to cause the breakup of the Grand Alliance, of which P&O Nedlloyd is the largest member. This is because Maersk Sealand has a tendency to operate as ” a lone wolf” outside alliances, he said. The other carriers of the Grand Alliance are Hapag-Lloyd, Malaysia International Shipping Corp., NYK and OOCL.
   CP Ships and P&O Nedlloyd also have several vessel-sharing agreements, which will have to be discussed if P&O Nedlloyd changes ownership.