In a decision that could steer more cargo to the port of Baltimore, the European Union has given Scandinavian shipping line Wallenius Wilhelmsen regulatory approval to purchase South Korea's biggest shipping company in a deal worth $1.5 billion.
Wallenius Wilhelmsen, one of the port's biggest customers, is close to finalizing a deal to purchase Hyundai Merchant Marine, which is struggling under the burden of $5 billion in debt.
The deal, which still must win approval from Hyundai's creditors, would double the company's fleet of 60 ships and make Wallenius Wilhelmsen the world's largest ocean transporter of cars and heavy machinery.
"When you put the volumes [of the two companies] together, we will be an even bigger user of the port of Baltimore and could have more rational operations and more efficiencies, which in the end is a benefit to everybody," said Wilhelm Wilhelmsen, president and chief executive of Norway's Wilh. Wilhelmsen, which merged in 1999 with Sweden's Wallenius Lines AB.
With its containership volume stagnant, the port of Baltimore has made attracting cars, farm tractors and other cargo that can be rolled on and off ships a centerpiece of its growth strategy. Last year, Wallenius Wilhelmsen signed a 20-year deal to make Baltimore its East Coast hub for roll-on/roll-off cargo in exchange for Maryland's pledge to build new facilities for the company at Dundalk Marine Terminal.
The Scandinavian shipping line's purchase of Hyundai Merchant Marine would give it greater market power, allowing it to bid on bigger contracts. As part of the agreement, Wallenius Wilhelmsen would become the exclusive carrier for Hyundai Motor Co. and its affiliate Kia Motors Corp. for at least the first five years after the deal is finalized. Hyundai saw its U.S. car sales climb 10 percent to 323,633 vehicles through October, compared with the year-earlier period.
The merger could solidify Hyundai's budding relationship with the port of Baltimore.
The auto manufacturer announced this year that it would begin shipping about 47,000 cars annually through Baltimore instead of New Jersey. It's uncertain at this point whether Hyundai would increase shipments of cars to Baltimore if the merger goes through. A spokesman for Hyundai Motors was unavailable for comment yesterday.
At a minimum, the deal could provide a lift to one of the port's biggest customers at a time when shipping lines are struggling through a global slowdown in cargo traffic as a result of the sluggish economy.
"I think if this deal goes through it will help to cement the role of Baltimore as the major ro/ro port on the Eastern Seaboard," Wilhelmsen said.
To win EU antitrust approval, Wallenius Wilhelmsen agreed to end a venture with Nippon Yusen Kabushiki Kaisha that ships cars between the Mediterranean, the Near East and Northern Europe.
"The commission was originally concerned that the deal might significantly reduce competition and lead to higher prices for the transport of cars between Europe and the Near East," the commission said in a statement.
"The offer to withdraw from the alliance" removed those concerns, it said.
Hyundai Motor and Kia, which account for about 70 percent of Hyundai Merchant's auto-transport business, each is to buy 10 percent of the venture. Wallenius Wilhelmsen is to own the rest.
The new venture is to be based in Seoul.
Bloomberg News contributed to this article.