COSCO Shipping to buy port assets for $2.7 billion to build digital supply chain

In order to create a worldwide digital supply chain for its clients, COSCO Shipping Holdings Co Ltd announced on Monday that it had reached an agreement to purchase port assets from its parent for a total of 19.7 billion yuan ($2.7 billion).

The Chinese shipping company announced that it would pay 18.9 billion yuan to China COSCO Shipping Corp Ltd for a 14.9% stake in Shanghai International Port and 778.7 million yuan for a 3.2% stake in Guangzhou Port.

Additionally, COSCO Shipping Holdings said that it secured agreements for the construction of five vessels costing a total of $1.2 billion with China COSCO Shipping’s Dalian COSCO KHI Ship Engineering. Its subsidiary Orient Overseas Ltd. has agreements for the construction of seven boats with Nantong COSCO KHI Ship Engineering at a value of $1.7 billion.

In the third quarter results, COSCO Shipping Ports announced a total year-on-year increase of 7.6% of total equity throughput and an 18.1% revenue increase to $349.4 million. Their press release stated a gross profit increase of 32% compared to last year, at $102.3 million.

Last week, the German cabinet approved COSCO’s purchase of a share in a terminal in Hamburg, the nation’s largest port, though the investment is lower than the initial 35% stake that the Chinese shipping company and HHLA had sought.

According to a Reuters source in the economy ministry on Tuesday, the stake in a Hamburg port terminal was lower than it had been originally intended as part of an “emergency solution” to approve the sale but lessen its effects. According to multiple government sources, the agreement calls for Berlin to approve the sale of 24.9% of the terminal to COSCO. On Wednesday, the cabinet will discuss it.