What’s behind the French ocean shipping line CMA CGM’s joint venture with PSA Singapore Terminals?

It’s an attempt by PSA Singapore’s owner, Temasek Holdings, the government of Singapore sovereign investment company, to win back Southeast Asia transshipment market share for Singapore from its Malaysian competitors.

In the joint venture company, the carrier will be taking a 49-percent ownership share to PSA’s 51 percent. The joint venture will lease and operate four container berths in the port of Singapore. So reports Alphaliner, the maritime transportation information service.

The joint venture’s facilities will be used as a dedicated container terminal for CMA CGM and its liner shipping affiliates and will have an estimated annual handling capacity of over three-million TEU.

This move follows the launch of an all-cash conditional general offer by CMA CGM for all outstanding shares of Neptune Orient Lines (NOL), parent company of the ocean carrier APL on June 6. CMA CGM already owns over ten percent of NOL’s shares and intends to de-list and privatize NOL through the offer, according to Alphaliner.

NOL’s majority shareholder is Temasek Holdings, which agreed to tender all its NOL stake at CMA CGM’s offer price of US$0.96 per share.

Meanwhile, Temasek is also the sole owner of PSA Singapore. The move to set up the terminal joint venture with CMA CGM, according to Alphaliner, is part of the Singapore government’s plan to claw back some of the transshipment volumes that have been lost to the competing Malaysian ports of Port Kelang and Tanjung Pelepas.

PSA’s share of the Southeast Asia container transshipment volume has fallen from 89 percent in 2000 to 62 percent in 2015. The port of Singapore’s overall container throughput has fallen by 7.8 percent in the first four months of this year, following a 8.7-percent loss last year, while its primary competitors have gained volume.

CMA CGM currently handles Southeast Asia transshipment at Port Kelang, where it is the highest-volume port customer. At Westports, the larger of Kelang’s two terminal operators, the carrier generates more than 20 percent of the volume, Alphaliner noted.

If all goes according to plan, it looks like Port Kelang’s loss will be Singapore’s gain.