WHILE there were be some changes to the fortunes to Singapore and Port Klang (Westports) brought about by expected CMA CGM-NOL merger, they are likely to be slight to barely appreciable, says CIMB Securities analyst Raymond Yap.
"Westports' transshipment volumes on the Asia-US trades will likely be consolidated in Singapore, whereas the Asia-Europe and Oceania transshipment volumes will be consolidated in Westports," he said.
"This is because CMA CGM has traditionally been strong in the Asia-Europe trades, whereas NOL has been strong in the transpacific," he said, reported IHS media.
But long-haul intra-Asia transshipment volumes could go to either Westports or Singapore, since CMA CGM shares NOL's strength in the Middle East and the Indian subcontinent.
Mr Yap concluded Westports stood to gain slightly over Singapore in the upcoming service restructuring between CMA CGM and NOL, as Westports was still the cheaper port of call.
Despite CMA CGM boss Rodolphe Saade saying his company would establish its Asia base in Singapore, Mr Yap said some of NOL's transshipped cargoes could still move from Singapore to Westports.
"Westports offers much lower tariffs than Singapore, and cost efficiencies are key to survival in a tough container shipping environment, and secondly, Temasek will make a clean exit from NOL, meaning that it will not have any leverage on the business decisions of the merged entity," he said.
Of course, the other mega merger in the works - Cosco+CSCL - affects the fortunes of the CKYHE alliance, which transships in Singapore, which could mean a six or seven per cent volume decline for Westports.
After CMA CGM buys NOL, and NOL migrates to the Ocean 3, the O3 capacity market share of the transpacific trade will rise from 14.5 to 18.8 per cent, but still below CKYHE's 34.5 per cent share and the G6's reduced share of 24.6 per cent.
If and when CSCL leaves the O3 to join the CKYHE, O3's capacity market share would drop back to 14.6 per cent and be hardly changed from the original share of 14.5 per cent, according to Mr Yap's calculations.
He said Westports could experience an exchange of transshipment cargo with Singapore. "We project that Westports will handle 9.03 million TEU in 2015. NOL is forecast to handle 4.87 million TEU this year, of which 4.44 million TEU will be handled on its Asia-based trades. Some of the transshipment cargo handled at Westports could be switched to Singapore, and vice versa.
WORLD SHIPPING
17 December 2015 - 21:48
Mergers change fortunes of S'pore, Westports, but not much: analyst
WHILE there were be some changes to the fortunes to Singapore and Port Klang (Westports) brought about by expected CMA CGM-NOL merger, they are likely to be slight to barely appreciable, says CIMB Securities analyst Raymond Yap.
WORLD SHIPPING
17 December 2015 - 21:48
Mergers change fortunes of S'pore, Westports, but not much: analyst
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