COSCO, China Shipping Group Co. to Merge Shipbuilding Operations
After a series of consolidation in the international shipping community, and a declaration from South Korean shipping firm Hanjin Shipping that government-backed companies made competition impossible, two of China's largest shipping companies agreed to combine 11 of their shipbuilding yards.
China Topix reported that China Shipping Group Co. and China Ocean Shipping Co. (COSCO) have a combined headcount of more than 25,000, making this newly formed partnership the third-largest shipbuilding group.
The merger is part of China's desire to reduce its reliance on heavy industry. Previously, the two companies combined their port operations and fleets in 2015.
This merger also points to the companies' desires to seek higher profits. COSCO reported a $1.1 billion loss for the first half of this year, and Chinese ship yards only received $3 billion in orders this year, compared to $26.5 billion last year.
The two companies are expected to formally announce the merger in January.