Southern Shipmanagement, Hapag Lloyd and UASC join forces to become a top four global container shipping company

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On the 12th of October, several high-level managers of Southern Shipmanagement arrived in Odessa. The team met Ukrainian office employees and sea officers. The Peter Doehle crewing agency hires seafarers for Southern Shipmanagement in the Ukraine.

«The most important reason to be here is to share with Ukrainian officers the company’s latest news and development plans,» explained Jaime Vargas, operations manager for Southern Shipmanagement. «We also need to find out how the crew feels about the company and what they think about their daily operations on board, in all respects. That is good for both sides. There are changes coming, and we want to make sure that everybody knows what’s going on in the company and what to expect next».

It has been a significant year for Southern Shipmanagement. The company has been in the shipping business for 35 years. It was founded in April 1981, when the CSAV and Wallem shipping companies joined forces to establish Southern Shipmanagement. Each company owned 50% of the shares until April 2014, when Hapag Lloyd purchased CSAV together with its 50% share in Southern Shipmanagement. Hapag Lloyd was looking for a partner that could manage vessels in South America, and the Chilean company had the appropriate experience.

This alliance quickly paid off. In May 2016, Hapag Lloyd purchased the remaining 50% of the company and became the full owner of Southern Shipmanagement. Currently, Hapag Lloyd is in the process of acquiring the Kuwait-based United Arab Shipping Company (UASC). When the deal is completed, UASC will join the alliance.

The companies plan to complete this integration within nine months, without losing fleet volume. Together, they will become one of the top five global container shipping companies in terms capacity; in fact, they will be in the top four. UASC’s 62 modern vessels will complement the powerful Hapag Lloyd fleet, and the combined fleet will consist of 237 fuel-efficient ships.

The partners expect that this merger will make the company more resilient to market volatility, balance its trade portfolio and strengthen their combined presence in the Middle East.

Below is an illustration of the global reach that the new alliance will achieve after the merger.

The merged company will have access to the important Asia-to-Europe trade route, and the trans-Atlantic and trans-Pacific routes.
The merged company will have access to the important Asia-to-Europe trade route, and the trans-Atlantic and trans-Pacific routes.

Maritime Executive reports that Hapag-Lloyd plans to reap a third of its targeted annual synergies of $400 million from its planned merger with UASC next year, and to realize them fully from 2019.

Until the deal is closed, the partners will continue to operate as separate companies. For now, seafarers are expected to focus on their daily business to ensure a head start for the integration. When the merger is fulfilled, Hapag Lloyd will be the leading partner, although all members of the alliance will continue to operate their own vessels. A joint team involving key employees from all partner companies will be established.

«Ukrainian seafarers are well-known across the world,» says Vargas. «They have a very good education system and equally good discipline on board. Most of our officers are Ukrainians. We are happy to work with Ukrainian officers and hope to maintain this policy in the future».

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