April 23, 2018 - Chinese shipping conglomerate COSCO is seeking to purchase Overseas Orient Container Lines (OOCL), but if it wants approval from the Trump administration for the merger, it may have to spin off OOCL's valuable Long Beach Container Terminal.
The U.S. Treasury's Committee on Foreign Investments in the United States, a panel with representation from the Departments of Homeland Security, State, Defense and 14 other agencies, is presently reviewing the COSCO-OOCL deal. The Wall Street Journal reports that the committee has concerns about a Chinese state-owned enterprise controlling LBCT, which is one of the most modern container facilities in America.
In 2011, OOCL and the Port of Long Beach began a major revamp at LBCT to modernize and expand its capacity. The project will combine two older terminals into one, called Pier E, which will have 14 semi-automated STS cranes, five intermodal cranes and 70 RTGs. When complete in 2019, the new terminal will have a design capacity of 3.3 million TEU per year, and OOCL expects that it will become one of the busiest in the San Pedro Bay complex. Its 4200-foot wharf will have more than 55 feet of water depth alongside, and its cranes will be able to handle the biggest ULCVs in the world - a rare feature for an American port.
While LBCT is a desirable asset for an ocean carrier, it may also be seen as a strategic asset for the United States. The Port of Long Beach is one of the top three gateways in the U.S. for container traffic, and it is next door to the busiest, the Port of Los Angeles. Together they handle nearly one fifth of America's containerized ocean freight.
CFIUS has expressed concern about other Chinese investments in recent months, reflecting the Trump administration's cautious view of trade with China. In March, the committee scuttled Singapore-based Broadcom's $117 billion bid for Qualcomm, citing national security concerns. The administration has also blocked U.S. companies from selling software or parts to Chinese telecom manufacturer ZTE. The Shenzhen-based smartphone maker had pled guilty to violating sanctions on Iran and North Korea last year, and the U.S. Department of Commerce accused it of giving bonuses to the employees involved, then misleading American officials about the payments.
Source: World Maritime News
