Maersk Line’s acquisition of Hamburg Sud will likely force it to sell its Brazilian flag operation Mercosul Line, which could open the door to CMA CGM or Mediterranean Shipping Co. to enter the closed Brazilian coastal shipping market.

Hamburg Sud has its own ECSA cabotage and feeder subsidiary, Alianca Navegacao, and if Maersk were to gain control of that subsidiary as well as Mercosul, it would control 80 percent of the ECSA coastal market, something the Brazilian competition regulator Conselho Administrativo de Defesa Economica, or CADE, would not allow.

“If they (Alianca and Mercosul) try to merge there will be problems with CADE. I think that Maersk will have to sell off one of these services and so the logical one to sell is Mercosul Line,” said Luis Resano, the executive vice president of the Brazilian Flag Shipowners Association. “Other shipping lines have shown an interest in entering the Brazilian cabotage market in the past.”

Mercosul Line operates three container ships that each have a capacity of 2,500 TEUs and runs a joint service with the sole Brazilian-owned box carrier, Log-In Logistica.

Alianca has 11 vessels of various sizes and controls more than 60 percent of the ECSA market, which is estimated at more than 800,000 twenty-foot-equivalent units annually.

Allowing Mercosul and Alianca to merge would threaten Log-In because the company has the oldest fleet in the coastal trades and has been struggling to turn a profit in recent years. Without Mercosul Line as a partner to offer the weekly service demanded by the market, Log-In’s future would be in doubt.

For example, without Mercosul, Log-In would certainly have to end its jointly operated Brazil-Argentina connection. Sling 1 of that service covers seven ports from the jungle port of Manaus to Itajai in the south of Brazil, while Sling 2 calls at seven ports from Fortaleza in the northeast of Brazil to Buenos Aires in Argentina.

JOC.com can confirm that CADE and Maersk officials have been in contact already, but “there is still a long way to go,” to figure out how to resolve the competition concerns.

CMA CGM is one possible buyer for Mercosul. It is well known in Brazil the French carrier has been trying to enter the Brazilian cabotage trade, possibly by buying some small Brazilian flag container ships, but it is very rare that any become available.