A new colossus was created in the shipping industry yesterday, with Neptune Orient Lines (NOL) of Singapore taking over United States shipping giant American President Lines (APL) for US$825 million, the latest mega-consolidation to hit the industry. NOL/APL will have a fleet of 113 vessels, including 30 tankers and seven bulk carriers, generating combined revenues of US$4 billion a year, making it the fifth largest container operator in the world, based on September figures. With over-capacity and weak freight rates dogging the industry around the world, a string of mergers among some of the leading international players has been forecast, to enable them to compete better. In September, Britain's P&0 Containers announced a US$1.5 billion merger with Nedlloyd, of the Netherlands. Hapag Lloyd was recently considering linking with a small German operator, but the deal fell through. The NOL/APL merger will put the combined strength of 76 container vessels on equal footing with Nippon Yusen Kaisha (NYK)/TSK Line, which has lost out in terms of total container capacity. NOL/APL has a combined 167,900 teu (20-ft equivalent unit) container capacity while NYK/TSK Line has only 129,731 teu's, according to Containerisation International Yearbook data published in November. Based on those figures, APL was ranked 15th largest container line before this merger and NOL was ranked 17th. NOL, Singapore's national carrier, is strong in Europe-Far East trade, as well as in trans-Atlantic Far East trade to the US, while APL is a leader in the trans-Pacific and intra-Pacific trades. New York-listed APL will continue to operate under its own name as a 100 per cent-owned NOL subsidiary. APL president Timothy Rhein said: 'The future of the shipping industry belongs to those who have a global vision, and the strategy and critical mass to realise that vision.' It had long been rumoured APL would seek a strategic tie-up and that its owners were willing to sell shares. However, some analysts had expected some kind of merger with Hong Kong's Orient Overseas Container Lines (OOCL), with which it has a strategic alliance. Analysts said it was still too early to say what would become of APL-OOCL's interdependence in the trade. Another alliance, between Danish carrier Maersk Line and US-based Sea-Land group, is also looking at cutting costs by evaluating everything from ships to chassis-container pools, from terminals to computer systems. This alliance is expected to save Sea-Land-Maersk at least US$100 million a year. Several transport economists and academics are predicting that there would be no more than five leading container service providers or groupings by 2000. APL's shareholders will benefit, as NOL's offer price of US$33.50 per share for all 24.6 million outstanding APL shares means they will enjoy almost a 100 per cent return. James Capel associate director and shipping analyst David Leow said: 'If I were an APL shareholder, I would be very happy.' NOL will benefit by significantly increasing its market coverage and will provide the critical mass to benefit from economies of scale. Customers should benefit from a greater choice of services and shipping times, especially if cost-savings can be translated into lower prices. Lua Cheng Eng, NOL deputy chairman and chief executive, said: 'We expect both companies to realise significant cost savings of at least US$130 million a year from the consolidation of certain operations and improved efficiencies, including enhanced network optimisation, streamlined information technology systems, improved box utilisations, lower inland costs and reduced terminal expenses.' The companies say this is expected to be achieved without a drastic cut in staff. Mr Rhein, who has been invited to join the NOL board, said: 'This combination of the complementary APL and NOL route systems, service organisations and inter modal assets creates a global container line with recourse to provide customers comprehensive and efficient worldwide shipping services.' He said the merger in no way lessened APL's commitment to the US flag and American seafaring labour. 'Consistent with US maritime policy, we fully expect to ensure the continued availability of US-flagged and crewed ships,' he said.