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By Paul Page 

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The next wave of container shipping consolidation may go through China. Chinese conglomerate Cosco Group is in talks to acquire smaller rival Hong Kong-based Orient Overseas Container Line Co., the WSJ's Costas Paris reports. The carriers already are lined up under the Ocean Alliance grouping that will start operations this spring, but the purchase would add new weight to the Chinese operator in a business where scale is becoming an overriding business imperative. With a 2.8% share of the global shipping market, OOCL is the ninth-biggest carrier in the world but sits outside the ring of dominant carriers that seem to be setting the pricing and capacity agenda for container shipping. Cosco is looking to move up the rankings to challenge the world's top three shipping lines, a move that will carry a heavy cost. The state-owned company is preparing a bid valued at more than $4 billion. But analysts at Alphaliner say market value would push the purchase price closer to $4.7 billion if the two sides can strike a deal.

Hunter Harrison is leaving Canadian Pacific Railway Ltd. but he isn't done trying to reshape North American freight rail business. Mr. Harrison is teaming up with an activist investor in a bid to shake up management at U.S. carrier CSX Corp., just as he did at the Canadian railroad, the WSJ's David Benoit and Jacquie McNish report. Mr. Harrison is working with Paul Hilal, who left Bill Ackman's Pershing Square Capital Management LP to launch his own fund last year, and has raised more than $1 billion for a single investment. Mr. Harrison came on board at CP in June 2012 after a proxy battle waged by Mr. Ackman, and the two fought an unsuccessful battle to revive rail consolidation with a takeover of Norfolk Southern Corp. He's also led a turnaround at what was viewed as one of the worst-performing railroad companies in North America. The company's fourth-quarter results highlighted that efficiency, with profits jumping sharply to $289 million despite a slip in revenue to close out a tough year for freight rail operators.

The breaking apart of Hanjin Shipping Co. is picking up steam. A bankruptcy judge's approval of the hotly-contested sale of the carrier's stake in a Long Beach, Calif., container terminal operator removes the most visible part of Hanjin's U.S. operations, the WSJ's Tom Corrigan and Erica E. Phillips report. The ruling follows attempts by U.S. creditors to halt the sale in hopes of a more lucrative deal and what the judge says were assurances that the creditors will be treated fairly in South Korea's bankruptcy court. The sale, for $78 million in cash and relief of $54 million in debt and other obligations, gives Mediterranean Shipping Co. full control of Total Terminals International LLC. MSC is following up by selling a 20% stake in the terminal business to South Korea's Hyundai Merchant Marine Co., stepping up the cooperation between the two carriers. Meantime, Hanjin's retreat from the shipping business now returns to Asia, where it looks like a full liquidation is underway.

SUPPLY CHAIN STRATEGIES

The logistics field's quiet period in mergers-and-acquisitions activity may be ending. Ridgemont Equity Partners is buying Worldwide Express from another private-equity firm and blending the business with the Unishippers Global Logistics operation it already owns, WSJ Logistics Report's Erica E. Phillips writes. The combination will create a business with more than $1 billion in revenue, making the new Worldwide Express Global Logistics a top-30 freight broker in the U.S. The company will hold a significant share of the less-than-truckload market, and has plans to expand its truckload business. The deal will also pull together the only two authorized resellers of United Parcel Service Inc. services to small businesses. The deal is one of the biggest in several months in the U.S. logistics arena, a sharp contrast with 2015 and the first part of last year, when a series of splashy purchases consolidated logistics operators.

QUOTABLE

IN OTHER NEWS

Rising global temperatures in 2016 set a record for the third year in a row, as federal climate watchers rated it the warmest year worldwide since modern record keeping began. (WSJ)

Overall U.S. industrial production rose at the fastest pace in more than two years in December but factory output increased at a more modest 0.2% pace. (WSJ)

A broad measure of inflation poked above 2% for the first time in two-and-a-half years in December. (WSJ)

United Continental Holdings Inc.'s fourth-quarter net profit declined sharply as cargo revenue increased 8.2% on a 16.1% gain in cargo traffic. (WSJ)

Aircraft leasing companies are holding back plans to enter Iran because of potential policy changes under the incoming Trump administration. (WSJ)

Toshiba Corp. is weighing a spinoff of its profitable semiconductor unit. (WSJ)

The Federal Trade Commission is suing Qualcomm Inc., alleging the company unlawfully maintained a monopoly on a type of semiconductor used in cellphones. (WSJ)

The U.S. launched a trade challenge against Canada's treatment of U.S. wines in the British Columbia province. (WSJ)

The U.S. Merchant Marine Academy at Kings Point, N.Y., has failed to correct persistent sexual harassment, assault and pervasive sexism, according to reports on the maritime educational institution. (Newsday)

Two-thirds of Americans surveyed in a poll oppose using tolls to draw private investment for infrastructure. (Washington Post)

A.P. Moller-Maersk A/S Chief Executive Soren Skou says capacity reduction by container lines is helping drive up shipping prices. (CNBC)

Cargo ship owners are seeing charter rates fall to historic lows as container shipping lines dispose of excess tonnage. (IHS Fairplay)

Amazon.com Inc. plans to open a 1.2 million-square-foot distribution center northeast of Baltimore. (Baltimore Sun)

Japan will subsidize installation of pickup lockers at various sites to cut down on delivery of e-commerce purchases. (Nikkei Asian Review)

Utah businesses want the state to back construction of a container handling station, or inland port, in the northern part of the state. (Salt Lake Tribune)

The owner of New Jersey trucking company was arrested while boarding a flight to Aruba after racking up more than $1 million in unpaid tolls for company trucks. (Philadelphia Inquirer)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

January 19, 2017 06:57 ET (11:57 GMT)

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