When Hapag-Lloyd announced its merger agreement with United Arab Shipping Company at the end of June 2016, it took the lead in a consolidation game that has since seen a number of M&A deals, including Cosco striking the most expensive acquisition in container shipping history by way of its OOCL acquisition.
The demise of Hanjin Shipping and tighter capacity came to the rescue of container shipping lines who found themselves in a fast-consolidating market. These events transformed what was a dreadful investment for over a year – its purchase of UASC, into a spectacularly high-yielding investment since the turn of 2017.
Hapag has emerged in a more dominant position thanks to rising freight rates and a lack of alternatives on the routes it serves. Moreover, officials at Hapag-Lloyd believe that global GDP growth will accelerate above trends within the next 15 months, with volumes comfortably outpacing global economic growth.
Despite the growing optimism, based on its current financial situation, Hapag remains the smallest, and the most vulnerable. If a best-case scenario does not play out, and rate levels become more difficult to maintain, it would make Hapag-Lloyd one of the most obvious takeover targets in the industry.