(Deutsche Welle Chinese website) According to the German "Handelsblatt" report, the German federal government plans to prohibit COSCO Shipping from acquiring logistics company Zippel. The news comes from an internal government memo reviewed by Handelsblatt, which cited "significant security concerns." A final decision has not yet been made, but people familiar with the matter expect the outcome may be unfavorable to COSCO Shipping Lines.
A spokesperson for COSCO Shipping told Reuters on Tuesday (September 29) that the company would not comment until a final decision is made. Neither Zippel nor the German Economy Ministry responded to requests for comment.
Concern that strategic dependence is being used as a pressure tool
According to Handelsblatt, the world's fourth largest shipping company plans to acquire 80% of Zippel's shares.
Hamburg-based freight forwarding company Konrad Zippel is mainly engaged in sea-land combined transport business, connecting inland truck transport and rail transport with ocean-going freighters. Cargo is shipped mainly from North Sea ports to eastern Germany. Although its market share is small, its business is concentrated in eastern Germany. It is this geographical business layout that triggered Berlin's opposition to the acquisition.
According to documents seen by Handelsblatt, Zippel's cargo handling volume at its three cargo terminals in Berlin, Schkopau and Elsterwerda accounted for between 35% and 90%. The document notes that this could create strategic dependence - which could be used as a pressure tool when political relations are in turmoil.
In addition, related concerns relate to logistical support for the Bundeswehr. Logistics to Germany's eastern border are also crucial for NATO in the event of conflict.
Unlike the dock case: ministries and commissions unanimously opposed the takeover
In the Port of Hamburg, Germany, COSCO Group also acquired a 24.9% stake in the Tollerot container terminal in 2022. Despite widespread concerns that Beijing would gain too much influence over critical infrastructure and deepen Germany's economic dependence on China, then Chancellor Scholz still pushed for the deal to be approved. After a long debate, the German federal government approved China's stake in May 2023, but limited the shareholding ratio to less than 25% to prevent it from obtaining a minority voting rights sufficient to prevent major shareholder resolutions. At the time, opposition to the investment came mainly from the Ministry of Economy, led by the Green Party.
According to the "Business Daily" report, not only the Ministry of Economic Affairs, but also the Ministry of Foreign Affairs, the Ministry of Defense, the Ministry of Interior and the Ministry of Finance also hope to block the transaction when COSCO Shipping plans to acquire Zippel's equity. The European Commission also issued a warning to the German Economics Ministry regarding the acquisition.
At the end of April this year, an investigation by the German Broadcasting Federation revealed that the German Federal Office for the Protection of the Constitution had internally clearly opposed COSCO’s acquisition of Zippel on the grounds that COSCO Group’s “cumulative acquisitions” in Europe may lead to further strategic expansion of the Chinese state-owned shipping giant. The so-called "cumulative acquisitions" refer to multiple seemingly separate and scattered investments that actually serve the country's overall long-term strategy.
Further reading - How should Germany treat investment from China?
As of Tuesday, Reuters could not reach Zippel general manager Axel Plaß for comment.
In an interview with Deutsche Verkehrs-Zeitung, Plass said that after the German Federal Cartel Office approved the transaction, the Economic Ministry launched a second round of review in the investment review process. He said further scrutiny would include issues such as the state of Zippel's software architecture and whether the company handles sensitive data.
"We usually don't know what's in the container because we're just a small link in the supply chain," Plath said. He also said the company's IT architecture originated in Germany and Europe.
He concluded by saying: "Zippel's market share is about 1.5%, which is not worthy of attracting such great public attention."
