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Dec.14, 2015

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LONG-TERM US HIGHWAY BILL PROVIDES FUNDING WINDFALL THE U.S. CONGRESS appears as if it will finally act to remedy the nation's aging surface infra- structure through a fully funded f ive-year bill with $10.8 billion in g rants for freight tra nsportation projects. The $305 million legislation, known as Fixing America's Sur- face Transportation, allocates some $205 bil- lion on highway and another $48 billion on t ra nsit projects over t he next f ive yea rs, t he longest period in almost t wo decades. FA ST specif ica l ly wou ld f u nd a f reig ht- specif ic compet it ive g ra nt prog ra m , t he Nat iona lly Sig nif ica nt Freight a nd High- way Projects Program, to the tune of some $4.5 billion over the next f ive years, and a freight formula program, the National High- way Freight Program, at $6.3 billion over the same five years. CANADIAN PACIFIC SETS SIGHTS ON NORFOLK SOUTHERN AS THE CONTAINER shipping industry moves toward consolidation, Canadian Pacific Railway is looking to shake up the Class I industry — even its takeover target appears less than enthused. CEO Hunter Harrison told investors and the media in November that he's willing to re-eval- uate and raise his company's $28 billion takeover bid for Norfolk Southern. But NS has played it cool — if not cold to Harrison's proposal. The deal was "an unsolicited, low-premium, non-binding, highly conditional indication of interest," NS said in a statement. In the official NS response, the company also highlighted significant regula- tory hurdles the Class I merger would face in Washing ton and Ottawa. Harrison said the Calgary-based railroad has been more aggres- sive with its offer to NS than its failed attempt to acquire the Virginia railroad's rival, CSX Transportation, a year ago."We'd prefer this not be a hostile situation. That's not us," Harrison said, before adding, "but define hostile." CONSOLIDATION EFFORTS ADVANCE AMONG CONTAINER CARRIERS THE GLOBAL CONTAINER shipping industry is lurching a step closer to consolidation. Through an exclusivity agreement to com- plete due diligence and negotiate an offer for NOL, CM A CGM was able to edge out Maersk Line for the parent company of APL. The tie-up of the French and Singapore-based carriers would be the biggest consolidation in container shipping, based on the capacity of the targeted carrier, according to research analyst Alphaliner. Adding Singapore-based APL's capacity to French carrier CMA CGM's 1.79 million-TEU fleet would give the com- bined carrier an 11.5 percent share of global capacit y, behind market leader Maersk at 14.7 percent with a 3 million-TEU fleet, and second-ra n ked Mediter ra nea n Sh ipping Co. at 13.4 percent with 2.7 million TEUs. Meanwhile, the potential merger of China's state-owned giants Cosco and China Shipping will continue into the new year, the groups said in exchange f ilings, six months af ter trading in shares of their listed subsidiaries was suspended. The leng thy negotiations over "asset consolidation," widely accepted by the industry as merger negotiations, were extended to Jan. 10, according to announce- ment s to t he Hong Kong a nd Sha ng ha i bourses. Although it's attracted less atten- t ion , Ru s sia's cont a i ner t ra n sp or t at ion market also is on the verge of consolidation. The country's two largest, and ailing, con- tainer transportation providers — container line and terminal operator Fesco and contain- erized rail provider Transcontainer — plan to merge. Russian f inancial conglomerate Summa Group, which owns 32.5 percent of Fesco, and the Russian railway monopoly RZD, which holds a 51 percent stake in Trans- container through its United Transport and Logistics Co., have begun talks, with a merger expected by the end of 2016. Spotlight 6 THE JOURNAL OF COMMERCE DECEMBER 14.2015 6 THE JOURNAL OF COMMERCE

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