New management has painted a big fleet expansion plan for the Hong Kong-based carrier to increase competitiveness and extend global reach following its merger with Cosco Shipping.
Company is looking to order 20,000 teu ships and expand fleet capacity by about 40%, says OOIL chief executive Huang Xiaowen.
HONG KONG-listed Orient Overseas International Ltd is targeting a substantial expansion in fleet size, following its merger with the state giant China Cosco Shipping Group.
Orient Overseas Container Line, OOIL’s liner shipping arm, is looking to boost its fleet capacity to 1m teu from the current level of around 700,000 teu by ordering new ships, among other measures, OOIL chief executive Huang Xiaowen told a press conference on Monday.
Mr Huang, a vice president of China Cosco Shipping, took on the new role last week, after the Chinese conglomerate completed its $6.3bn acquisition of OOIL.
"OOIL’s lower debt ratio and strong financing ability will allow it to order new ships, especially the 20,000 teu ships.” he said, adding that a larger fleet would help the Hong Kong-based shipping line to explore new markets, increase global coverage and attract more investors.
Cosco Shipping Lines, the container shipping unit of the state parent, and OOCL currently control over 2.7m teu of capacity in a combined live fleet, ranking the world’s third largest.
CSL also has 20 ships, or more than 300,000 teu, on order.
The Ocean alliance, in which CSL and OOCL are both members together with CMA CGM and Evergreen Line, now leads the market share in transpacific services. But the grouping still trails the 2M alliance— consisting of Maersk Line and Mediterranean Shipping Co—on Asia-Europe trade.
While there was no timeline given for the expansion plan, Mr Huang noted the ordering would need to fit into market conditions as well as the companies’ strategic demand.
The most pressing demand was to realise synergies between the two carriers--targeted to be no less than $400m per annum--while remaining OOIL as an independent brand, according to Mr Huang.
To achieve that goal, a working group has been established to coordinate on a series of operational matters, including procurement, network design and container management.
In addition, as first reported by Lloyd’s List, OOCL has appointed two chief executives—OOCL’s former chief executive Andy Tung and Cosco Shipping Holdings’ current president Wang Haimin.
CSH is the Shanghai-and Hong Kong-listed parent of CSL, and a subsidiary of China Cosco Shipping.
Both Mr Tung and Mr Wang presented at today’s press conference.