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Hamburg Sud to acquire CCNI liner business

HAMBURG: Hamburg Sud (Südamerikanische Dampfschifffahrts-Gesellschaft –HSDG) is to acquire the container liner business of its partner Compañía Chilena de Navegación Interoceánica (CCNI) for US$160 million.

CCNI container ship AfricaHSDG says the deal, which is subject to due diligence and regulatory approval, is expected to be completed by the end of this year and will strengthen its liner network to and from South America.

The agreement also includes a 12-year lease by HSDG of 4x 9,000 TEU vessels currently under construction by shipbuilders HHIC-PHIL for CCNI.

CCNI's liner services include its weekly 'North Asia Express' with 10 x 5,500 TEU vessels sailing from Mexico, Peru and Chile to Keelung, Hong Kong, Shekou, Xiamen, Ningbo, Shanghai and Busan.

The company also operates a weekly 'China Express' service with 11 x 5,500 TEUs vessels to Busan, Shanghai, Ningbo, Yantian and Hong Kong from Mexico, Panama, Colombia, Ecuador and Chile.

CCNI reported a 2013 net profit of US$ 0.16 million on revenues of US$841.47 million – down from US$9.32 million on revenues of US$918.5 million the previous year.

The company said the drop was due to lower freight rates despite a reduction in bunker fuel costs. "The positive result is noteworthy within the industry's context where most shipping companies continued to sustain operational losses," it added.

Following the completion of the deal with HSDG, CCNI will continue to operate its non-liner shipping activities including the car carrier and ship-owning business.

The news of the acquisition coincides with half-year results by Kuehne+Nagel and Panalpina. Both companies say their ocean freight business grew by eight percent during the period – five percent higher than the overall market.

However the pressure on prices continued as Panalpina reported an EBIT-to-gross profit margin drop from 6.9 percent to 2.9 percent for the first six months of 2014 compared to the same period last year.

By comparison, Kuehne + Nagel said it was able to keep its EBIT-to gross profit margin at 29.1 percent compared to the previous half year of 29.9.

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