By Joy Orlek
P&O Nedloyd merger will cause some upheaval, but we will benefit from the fact that SA is a growth market - Turner
LAST WEEK's announcement of the complete merger of the container interests of the Dutch national carrier Nedlloyd and the UK's P&O will create one of the largest container shipping companies in the world.
The merged company will be called P&O Nedlloyd Container Line (P&O Nedlloyd) and will be based in London with fleet management in Rotterdam.
John Turner, Cape Town- based chairman of Ellerman & Bucknall, agents for P&O, was clearly delighted with the development. We go together extremely well with little overlap in terms of services, he told FTW.
The move will create a shipping line with the ability to service every part of the world with connections to every other part and which will become a major force in SA shipping. It's early days yet for any firm commitments on how the move will affect local operations, offices and staff of the two lines.
Both P&O and Nedlloyd are members of the SA - Europe Container Service consortium. Nedlloyd's involvement in SAECS is represented by Safmarine in Southern Africa. Obviously it will be for the partners in SAECS to decide how to handle that situation in the new relationship, Turner told FTW.
To the outside world SAECS will be strengthened. Rationalisation of the two companies has been a key part of discussions. From a total cost base of $3,9 billion (R17,55 bn), savings in excess of $200 million (R900 million) a year have already been identified. These savings will be achieved by reducing the workforce of approximately 9400 to 8000, greater network efficiency, improved IT systems, more efficient box utilisation, lower inland costs and reduced terminal expenses.
One would anticipate that the merging of the two organisations in South Africa will cause some upheaval, but we will benefit from the fact that it is a growth market, says Turner. Hopefully the merger will be accomplished without too much trauma. Of the total 9400 staff members employed worldwide, approximately 420 are based in South Africa.
The proportional reduction in South Africa could be less because of the growth factors. Turner believes that the nature of the container shipping industry dictates the need for economies of scale.
Without economies of scale it's very difficult to compete and to afford the systems demanded by the industry. Further alliances will clearly be considered in the future, he said.
