P&O: Ports, Ferries, Logistics and Reorganization
Mergers carried on in the early 1990s. In 1991 P&O bought a half-share in Laing Properties, another top property concern. During that time, P&O bought the bulk of the Ellerman cargo shipping business from Cunard, providing it with over a quarter of the British share of container trades between Europe and Australasia, 100 percent of the UK-Australasia run, and 15 percent of the Europe-South Africa trade. Later in 1993, the company went with its first huge investment in China since 1949 by buying a 25 percent stake in the Shekou Container Terminal in southern China for approximately US$40 million. P&O started running the terminal at the beginning of 1994. Additional investments in China then took place. Meanwhile in 1993, some of the nonshipping companies obtained via the acquisition of SGT were stripped off.
Ultimately there was a call for reorganization, and this intensified in the mid 1990s as P&O’s ferry activities experienced a submergence from the fresh competition from Eurotunnel, a channel tunnel between France and Britain that was inaugurated in 1994 and shortly obtained 40 percent of the market for auto and freight crossings. Other P&O business, including bulk shipping, containers, and property, were also negatively affected. On a lighter note, P&O’s cruise lines were going through fast developments up to a point where Princess Cruises called for the building of Grand Princess, the world’s largest cruise ship.
Meanwhile, reorganizing started in the other sectors, beginning in late 1996 when the company joined its containers business with that of Royal Nedlloyd N.V. to create P&O Nedlloyd Ltd. (a 50/50 joint venture that immediately turned out to be worldwide leading container-shipping companies with yearly revenues of US$4 billion). In 1997 P&O considered Bovis Homes a separate, publicly traded firm. The year after the company created an additional joint venture, this time entailing its short sea routes on the English Channel. P&O owned 60 percent of the new entity. With the merger, the 2 partners were looking into minimizing their operating expenses by approximately £75 million annually and therefore improving their competitive standing.
Yet another joint venture was created in 1998 when P&O joined its bulk shipping activities with those of Shougang (China steel group) to established Associated Builk Carriers Ltd. In the year 2000, though, P&O purchased its partner and declared that it would take out the subsidiary via an IPO. However, bad market circumstances negatively affected the public offering that had been organized for Oslo.
The divestment efforts carried on between the years 1999 and 2000. During the previous year, P&O offered the bulk of its investment property portfolio, Bovis Construction, and Earls Court and Olympia. The majority of the remaining investment property was offered in 2000. Having already minimized itself to ferries, cruises and logistics, P&O de-merged its cruise line unit as P&O Princess plc (listed on the New York and London stock exchanges) in the same year. The company was also looking to offer Associated Bulk Carriers and float its containers business when market circumstances had adequately picked up. Therefore the outlook of P&O was to be concentrated around the running of ports, the management of ferries and the supplying of logistics for the business-to-business supply chain.
By the 21st century, the P&O units running in these parts were thriving, charged by rising e-commerce, tourism, world trade and consolidation in the industry. Even though it had chucked out its more sensational cruise line operations, the company looked to have a positive outcome in the lower profile but likewise money-spinning logistics sector.
