26th July 2017
THE acquisition of Hong Kong premier shipping line Orient Overseas Container Lines (OOCL) puts Cosco in a strong position to challenge European rivals Maersk and Mediterranean Shipping Company (MSC) for the number one spot in world container carrier rankings, says London's Financial Times.
The US$6.5 billion OOCL buyout comes as Cosco, earlier spent $20 billion buying overseas ports in the year to June, double the amount they spent in the same period a year earlier, reports the FT.
"From Beijing's perspective, it is partly a defensive strategy. China's economy is currently reliant on foreign shipping companies to export the iPhones, furniture and shoes it produces and to supply it with the raw materials and finished goods required by its vast domestic market," said the FT report.
Expanding Cosco is also in line with Chinese President Xi Jinping's Belt and Road strategy to deepen infrastructure and trade links with Asia and Europe - a point dutifully noted by Cosco in its statement to the stock market explaining the rationale for the OOCL purchase.
"It's pretty clear that China wants to be number one," says one European shipping executive. "For Cosco, it's more about geopolitics than profits as they are willing to pay more for shipping liners and ports than their commercial rivals."
From a geopolitical standpoint, China's increasing control over shipping and ports provides it protection and projection, said the FT.
Control of commercial shipping lanes will help China in times of conflict and dispute. Ownership of overseas ports will make it easier for China's navy to fulfil its ambitions to sail regularly in waters far from home.