Deal undone
Container production – MCI not to CIMC. The emergence of a container manufacturing oligopoly still seemed unstoppable in October. The fact that these expectations weren’t fulfilled is related to global policies.
On 27 September 2021 Maersk said goodbye to its subsidiary Maersk Container Industry (MCI), which had been in business since 1991, and to the latter’s Qingdao facilities. There is no longer room for this kind of a diversified entity in the Danish enterprise’s strategy of integrated container transport and logistics services.
The takeover agreements for the firm were signed and sealed with the China International Marine Containers Group (CIMC), the largest manufacturer worldwide of steel containers for maritime shipping (see also page 11 of ITJ 41-42 / 2021).
The US competition authorities have now put an end to the planned purchase.
Adding this entity to its portfolio would have been worth USD 987 million to the Chinese corporation, which is also linked to Cosco and the logistics company CMHI. CIMC, founded in 1980 and headquartered in Shenzhen, wanted the deal – with all of the requisite regulatory approvals – to be completed in 2022.
Operationally, MCI would have been integrated into the CIMC subsidiary Taicang CIMC Reefer Logistics Equipment (TCRC), which was founded in 1995. The deal would have included MCI’s reefer factory in Qingdao and the valuable research, development and testing facility in Tinglev (Denmark).
This would have made TCRC the world’s largest container manufacturer in the reefer segment as well. The US anti-trust authority took exception to this and ended the effort at the end of August this year.
Risks of market concentration too great
The US department of justice (DoJ) said in its statement that the “proposed transaction would have combined two of the world’s four largest suppliers of containers and reefers and would have consolidated control of more than 90% of the market in state-owned or state-controlled Chinese firms.” Certainly, the political mood in the USA played its part in these considerations.
“American consumers rely on the global cold chain for many everyday consumer goods,” deputy attorney general Jonathan Kaner, head of the department’s anti-trust division, was quoted as saying. He criticised the risk of “higher prices, lower quality and reduced resilience in global supply chains”. Germany’s federal cartel office cooperated with the DoJ in conducting the investigation.
The dominant position was also criticised in other ways. The risk of collusion among the “remaining suppliers in the maritime container market increased, as most are related through common ownership and related alliances.”
Honi soit qui mal y pense.