PIL throws cold water on takeover rumors

Singapore-based ocean carrier Pacific International Lines’ ties to African trades might make it an attractive candidate for buyers interested in gaining a foothold in the emerging market, according to industry analysts.

   Singapore-based ocean carrier Pacific International Lines (PIL) is throwing some cold water on recent rumors that it could be the next takeover target in a rapidly consolidating industry.
   Container shipping analyst Alphaliner recently noted that PIL is one of only four independent mid-scale carriers still in business, and the other three – Hyundai Merchant Marine (HMM), Yang Ming and ZIM – have links to their respective national governments and are therefore unlikely to be acquisition targets outside their home countries.
   In addition, PIL’s strong ties to African trade lanes might make it an attractive candidate for buyers interested in gaining a foothold in the emerging market, Alphaliner said.
   However, in an interview with the Journal of Commerce, PIL spokeswoman Lisa Teo indicated that the company did not want to heighten such speculation, in part because consolidation is seen as bad for the industry.
   Although she did not outright deny the rumors, Teo told JOC, “The liner market has improved significantly in the first half, and most shipping lines are fully aware that it is not sustainable to provide quality service at rates that are below costs.”
   According to Alphaliner, PIL recorded a significant net loss in 2016 because of “very low freight rates and a one-off bunker hedging loss” during the first half of last year.
   COSCO, which already has close ties to PIL via various vessel sharing agreements, would be the most likely bidder for the independent carrier, according to Alphaliner.