SM Line could partner with Cosco

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SM Line could partner with Cosco

SM Line, a small container shipping company formed from the remaining assets of Hanjin Shipping, is considering a partnership with China’s Cosco Shipping Lines.

While the companies have not yet signed a formal memorandum of understanding, SM Line said Tuesday that the two are in talks to establish a comprehensive partnership for joint operations especially on routes within Asia. To initiate the discussion, Kim Chil-bong, CEO of SM Line, visited the headquarters of Cosco Shipping Lines, the third-largest shipping company in the world, in Shanghai last week.

One reason SM Line partnered with Cosco may be because the Chinese company and Hanjin Shipping were in the same global alliance before Hanjin was wiped out. Container lines are bound by alliances to keep them competitive in terms of freight rates and port services. Both Hanjin Shipping and Cosco Shipping Lines had been part of the CKYHE Alliance, which no longer exists as all global alliances were realigned last year.

According to SM Line, Kim met with Wang Haimin, managing director of Cosco Shipping Lines, on the first day of his visit on March 15 and with Huang Xiaowen, executive vice president of China Cosco Shipping Corporation, on the next day to discuss detailed issues to enhance collaboration between the two companies.

Still, some barriers are expected due to disparities in the size of the companies’ operations. While SM Line is expected to handle roughly 400,000 twenty-foot equivalent units of cargo this year on intra-Asia routes, Cosco is expected to handle 5.7 million.

SM Line has also been eyeing a partnership with Hyundai Merchant Marine, currently Korea’s largest container shipper. However, Hyundai denied speculation of a potential partnership between the two companies.

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