COSCO Shipping said that as part of its plan to acquire the parent company of container carrier Orient Overseas Container Line (OOCL) it has agreed to divest Long Beach Container Terminal Inc. (LBCT) to a “suitable, unrelated third party” acceptable to the U.S. government.
In a filing with the Hong Kong Stock Exchange, COSCO and the parent company of OOCL (Orient Overseas (International) Ltd. (OOIL) said they entered into an agreement with the U.S. Department of Homeland Security and Department of Justice on Friday as part of a review of the COSCO purchase of OOIL by the Committee on Foreign Investment in the United States (CFIUS).
Until the deal is completed, COSCO said it will transfer LBCT into a trust overseen by a sole U.S. citizen. OOIL also will appoint a “security officer” who will not be a shareholder of OOIL and will be responsible for compliance with a “National Security Agreement and matters relating to the security of the LB Terminal business.”
China’s growing investment in ports around the world has been been subject to increasing scrutiny.
A Financial Times article last year described how China “has spent billions expanding its ports network to secure sea lanes and establish itself as a maritime power.”
COSCO said that under the agreement LBCT will continue to serve its customers and operate the terminal in a way that is “consistent with its practices prior to the transaction.”
The Long Beach Container Terminal leases the Port of Long Beach’s 311 acre Middle Harbor terminal. It is redeveloping the facility into what the port calls “the world’s greenest container shipping terminal” using electric and zero-emissions equipment.
Construction began in 2011 and the cost was estimated at about $1.5 billion. When completed, LBCT will have annual capacity to handle of 3.3 million TEUs and have an ondock rail yard able to handle 1.1 million TEUs or about 24 trains a week.
The port’s website notes the terminal is being developed in three phases. Phase one, the northern part of the terminal, “went live” in late 2015, and construction of phase three is scheduled to be completed by the end of 2020.
LBCT’s website indicates that terminal is called by OOCL’s Loop 6 and Loop 9 vessels.
In an article last month in the National Interest,
the magazine of the Center for the National Interest, Ronald Linden, a
professor of political science at the University of Pittsburgh noted, “In
today’s Mediterranean, the Chinese are the new 'sea people.’ Their
attacks are not military in nature, and their ambitions are not
territorial conquest. Rather, they aim to construct a seamless route for
investing in and selling their goods to the dominant commercial region
of today, Europe.
“Chinese State Owned Enterprises (SOEs) are
taking advantage of poorly performing economies (Italy) and antipathy
toward the dominance of Europe (Greece, Turkey). China comes brandishing
almost unlimited investment funds, and Beijing’s SOEs have set up shop
from Valencia to the Bosporus and from the North Adriatic to the Suez
Canal.”
He added that at the same time, China’s One Belt One Road
policy “is much more than the flag following national trade. It is
designed to expand Chinese strategic presence and enhance its influence
across South Asia, Eurasia, the Middle East and into Europe.”