Maersk, CIMC abandon $987M deal

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WASHINGTON.–Global shipping container suppliers China International Marine Containers and Maersk Container Industry in a joint statement said they have abandoned a merger plan, citing significant regulatory challenges.

China International Marine Containers (CIMC) in September had agreed to buy the Danish shipping company AP Moeller – Maersk’s refrigerated containers maker for $987.3 million.

The US Justice Department said the deal would have combined two of the world’s four suppliers of refrigerated shipping containers and further concentrated the global cold supply chain.

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The Justice Department said it “would also have consolidated control of over 90 percent of insulated container box and refrigerated shipping container production worldwide in Chinese state-owned or state-controlled entities.”

Assistant Attorney General Jonathan Kanter, who heads the Justice Department’s antitrust division, said the acquisition could have led to “higher prices, lower quality, and less resiliency in global supply chains” and “would have cemented CIMC’s dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor.”

Maersk said it was “unfortunate” the deal would not move forward, adding it “will now assess the best structural set-up to ensure the long-term development of the business.”

Founded by Maersk in 1991, MCI employs 2,300 people in China and Denmark.

Maersk earlier said it expects global container demand to fall this year as sales of durable goods come to a “standstill”, leaving flat-screen TVs and furniture piling up in warehouses.

A surge in consumer demand and pandemic-related logjams holding up containers in key ports had boosted freight rates and profits in the shipping industry in recent quarters, yet the cost of living crisis has reversed that trend.

Maersk, one of the world’s biggest container shippers with a market share of around 17 percent, said inflation and a worsening economic situation had dented consumer demand, which could lead to a normalization of the global shipping market towards the end of the year.

“Sales of durable consumer goods have come to a standstill,” Chief Executive Soren Skou told journalists at the company’s headquarter in Copenhagen. “Consumers have bought what they need for now of new sofas, kitchens, flat screens and garden furniture.”

However there were also more positive signs.

“On the other hand, within fast fashion and lifestyle products, like Nike and other brands, there is still a lot of demand,” Skou said.

In the United States, the country’s largest warehouse market is already full as major US retailers warn of slowing sales of the clothing, electronics, furniture and other goods.

Mearsk said the number of containers it had loaded on to ships fell by 7.4 percent in the second quarter compared with a year earlier.

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