A possible merger of China's two largest shipping lines by revenue could point the way toward possible streamlining of other State-owned enterprises, and help raise stock market sentiment, industry insiders said on Monday.
The joining of the five major subsidiaries of China Ocean Shipping (Group) Co and China Shipping (Group) Co－including COSCO Shipping Co, COSCO Holdings Co and China Shipping Development Co－was hinted at in a stock exchange filing on Friday which said trading in the firms' stocks would be suspended on Monday.
Ship.sh, a Shanghai-based shipping industry news website, reported the two parent companies planned to set up a reform committee to discuss a joint restructuring plan, which will be submitted to the central government within the next three months.
A press officer of COSCO's headquarters in Beijing told China Daily that the decision to suspend trading was made by the group's stock management department, but there are yet to be specific instructions regarding any merger from the State-owned Assets Supervision and Administration Commission.
COSCO and China Shipping control 80 percent of China's shipping market and have already agreed to operate together on domestic routes.
Yin Zhen, deputy-director of transport planning at the Institute of Comprehensive Transportation under the National Development and Reform Commission, said if the two companies did merge it would create an entity with 1.3 million TEUs of capacity.
However, Yin said a merger would require huge effort and resources, as the two Chinese shipping companies operate more than 140 separate shipping, port, shipbuilding and finance divisions throughout the world.
