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Large container merger paved with problems

Continuing losses at Chilean CSAV, the loss of market shares and volumes in South America, along with requirements for large capital injections and a stock listing are the key risks in Hapag-Lloyd's acquisition of the carrier, says Alphaliner.

Continuing losses at CSAV and overlapping routes on Latin America could be a tough challenge in the expected merger between German Hapag-Lloyd and the Chilean container carrier, currently set to become the 4th largest container carrier in the world with a total market share of 5.6 percent.

"The main pitfall to the proposed merger is the fact that CSAV continues to lose money. Significant service rationalizations across CSAV’s current network could be required to stem the losses, which could negate much of the synergies that both companies hope to derive from the merger," says analyst Alphaliner on Tuesday.

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