Land of the Giants
Mergers have been much in the news lately with the final agreement for China’s two major shipping companies COSCO and China shipping to combine and this week confirmation of the long rumoured merger talks between two of the largest P&I Clubs – Brittania and the UK Club. China’s new shipping giant – now known as COSCOCS – will seemingly have well over 800 vessels of various types under its control excluding any chartered tonnage. That number of ships will make it larger than AP Moller Maersk and MOL combined. For the two P&I Clubs the possible merger also has consequences, the two are second and third in size within the International Group behind Norwegian giant Gard which has 189m gross tonnage on its books. But if the merger happens, then the combined membership of the two prospective partners will be some 235.5mgt. The new body would also have an additional 125mgt of charter tonnage and free reserves in excess of $1bn. It would control almost one quarter of the tonnage and free reserves of the whole International Group. If it goes ahead it will be a meeting of hearts and minds for the two have argued that the policy of diversion that most IG members are pursuing is against the founding principles of the Group. The difference of opinion within the Group was brought into focus at the end of 2014 when IG Chairman Grantley Berkeley was quoted as saying “Diversification may enable Clubs to enhance the benefits which they can offer to shipowners... but it also has the potential to damage or undermine the concept of mutuality, both within the Clubs themselves, and within the Group. It may also raise issues for Clubs with their respective solvency/financial regulatory authorities. The issue will be one of increasing focus within, and outside, the Group in the year ahead.” As well as being IG Chairman, Berkeley is also chairman of Brittania’s manager Tindall Riley. If the merger talks are positive, the ultimate decision to proceed will be decided by the Members at Special General Meetings to be convened later in the year. The two club’s managers TR Miller and Tindall Riley are also planning to merge if the proposal goes ahead.