The Chinese government has approved a merger between two State-owned shipping giants, news portal caixin.com reported on Thursday, citing people with knowledge of the matter.
China Ocean Shipping (Group) Co (COSCO) and China Shipping (Group) Co will merge into one entity named China COSCO Shipping Group that will be based in Shanghai, the report said.
The companies will release further information on Friday, the report said.
The new company would be the world's fourth-largest container-shipping enterprise.
COSCO owns and controls more than 800 modern merchant vessels with an annual carrying capacity of 400 million tons, according to the company's website. China Shipping has total assets of 200 billion yuan ($31.06 billion), with annual income of more than 80 billion yuan, media reports said.
"The merger would achieve bigger economies of scale in competing with international shipping companies, which would enhance [the new company's] competitiveness in the global market," Zhang Yongfeng, director of the shipping market analysis department of the Shanghai International Shipping Institute, told the Global Times on Thursday.
But the companies have many similarities in scale, management and operating mode, Zhang said, adding that it would be hard to bring too much change to the companies in the short term.
The slowing economy has affected the shipping industry, Zhong Dajun, director of the Beijing Dajun Institute for Economic Observation, told the Global Times on Thursday.
"As the two companies have overlapping sectors, the merger can reduce their costs in competing with each other, which will conserve their resources, in particular in exploring overseas markets," he noted.
