China Cosco Shipping is having its cake and eating it too in the wake of its acquisition of Hong Kong's Orient Overseas Container Line (OOCL), according to OOCL deputy chief financial officer Michael Fitzgerald.

Cosco's cordial and long-predicted takeover of OOCL and holding entity Orient Overseas International (OOIL) last year was not about acquiring ships, but more about buying a brand that is in Cosco's interest to preserve, he told delegates at last week's Marine Money ship finance & offshore forum in Shanghai.

"This was an extremely well planned-out acquisition," Fitzgerald told interviewer James Tong, head of industrials for Citibank in China. Fitzgerald dismissed any suggestions that the buyer was motivated more by politics and national pride than purely commercial goals.

OOCL is not going to wither away under the Chinese state because, with it, Cosco acquires a network of customer relationships, the goodwill and reputation of a premium brand, and an established relationship to financiers.

‘Benefits’ all round

Cosco can keep all that but "still retain the benefits of M&A [mergers and acquisitions]", in particular the cost-saving synergies of integrating overlapping functions, Fitzgerald said.

Integration has already borne fruit for Cosco in the form of access to OOCL's more robust and secure data platform. When Cosco fell victim to ransomware attacks by hackers last summer, these were "dealt with quickly by the combined software" of the two sister companies.

Long before the cyber-attacks, Cosco had already had access to some of OOCL's IT functions for more than a decade under licensing arrangements, but the merger has accelerated an integration process.

"Cosco was buying a whole approach to business, not a lot of large containerships," Fitzgerald said. "If they had just wanted to acquire tonnage, there were cheaper ways to have done that."

One area where OOCL's business benefits from Cosco rather than the other way around is through Chinese President Xi Jinping's Belt and Road Initiative of global infrastructure investment and development.

Cosco is already well established in Belt and Road Initiative target regions including South Asia and East Africa, in many cases in countries where OOCL is less plugged in.

The overlap in the Cosco and OOCL customer base was "tiny", Fitzgerald said, not least in key Belt and Road Initiative countries.

"We can use that new presence in these new countries to access new business," he told the Marine Money crowd.

Foreigner dominated

Visiting shipowners outnumbered the locals at Marine Money's 10th annual Shanghai forum.

Foreign and domestic lenders and lessors were out in force, and that arguably comprises some of the biggest Chinese shipowners as the Chinese leasing companies move more in the direction of operating owners. But, in the stricter sense, Chinese shipowners were thin on the ground.

Although Fitzgerald was there to represent OOCL, his counterpart from parent Cosco was not present to confirm his views.

No one from Shanghai-based Cosco showed up to the well-attended conference, which took place during the "two sessions" amid a politically sensitive 10 days of meetings by China's rubber-stamp parliament.