Unexpected pivot in Hamburg
It's always about money and often about influence. The city of Hamburg has now secured both with its decision to have the world's largest shipping company, MSC, as a shareholder in the Hamburg port conglomerate, HHLA. The Swiss company's offer values the conglomerate at 1.2 billion euros, and the city of Hamburg will remain the majority owner with 50.1%. So far, so good, at least from the perspective of the Hanseatic city.
It's understandable that this change doesn't sit well with other interested parties, such as entrepreneur Klaus-Michael Kühne. Kühne had expressed interest and received a rejection – with the city stating that there would be no sale. After all, that was only half the truth, as Wednesday's ad-hoc announcement from HHLA proves.
Fallen behind the competition
Only a minority stake is being sold, so that the city of Hamburg, which currently owns 69%, will still have the upper hand. This is the key distinction: Neither Kühne nor Hapag-Lloyd reportedly wanted to settle for a minority stake. The city, on the other hand, is not willing to relinquish influence over such a crucial infrastructure as the port. Consequently, MSC was awarded the contract.
Whether the Swiss will be happy with their investment remains to be seen as the city's influence could complicate some strategic maneuvers. Furthermore the Port of Hamburg has also fallen behind in the competitive environment. Partly, because of strong growth in Asia during the globalization era, while the European economy has only seen moderate growth. Eleven of the world's largest 20 ports are now located in China.
China's significance is steadily growing
Chinese customers are becoming increasingly important for European ports as well. One-third of the containers in Hamburg come from China or are destined for China. Long-term commitment of such freight volumes is essential for the port. In this sense, it would not have been illogical to involve a Chinese shipping company in the shareholder structure. However, HHLA faced a severe backlash this spring when it decided to involve the Chinese company Cosco in a terminal. Thus, they may have been cured of such ideas for the time being.
Kühne recently stated that if he were to come to an agreement with HHLA, he would offer terminal stakes to competitors who have been feeling slighted, to "bind them to Hamburg and give them a say." Perhaps this is now an option to appease him and other unsuccessful bidders.