China’s two biggest shipping conglomerates, China Ocean Shipping, also known as COSCO, and China Shipping Group, are merging in the government’s latest effort to make the industry more competitive globally.
The combined entity will control 488 billion yuan ($76 billion) in assets, Barclays analysts have estimated.
Last month, Denmark’s Maersk warned that global demand for container transportation this year would grow at a slower pace than previously expected.
“With the approval of the State Council, COSCO and China Shipping will be restructured,” the state asset supervisor said on its website on Friday, using a phrase commonly understood to refer to the merger. It gave no other details, reported Reuters.
China Shipping Network Technology, the unit of China Shipping listed on the Shenzhen Stock Exchange, said the merger will focus on freight transport, container shipping, and oil transport services, in a stock exchange filing.
Trading in shares of COSCO’s flagship China COSCO and China Shipping’s China Shipping Development have been halted since Aug. 10. China Shipping’s said its shares will resume trading on Dec. 14.
The merger represents a massive reshuffling of central government-controlled assets just as consolidation of the country’s state-owned industry gathers momentum, said Reuters. The government already has driven the mergers of its two biggest nuclear power firms and top two train makers. Government regulators this week announced that Minmetals Corp of China would take control of Metallurgical Corp of China, which builds and designs mining and plant equipment.