Posted on July 31, 2024
As global shipping proves buoyant, Saltchuk Resources announced its plan to purchase Overseas Shipholding Group (“OSG”) in an all-cash deal that values the company at an aggregate equity value of approximately $653 million. Saltchuk is a privately-owned family of diversified freight transportation, marine service, and energy distribution companies, while OSG focuses on transportation services for crude oil and petroleum products.
“OSG, our nation’s leading domestic marine transporter of energy, has a strong cultural fit with Saltchuk and shares our commitment to operational safety, reliability, and environmental stewardship,” according to the deal’s press release. Mark Tabbutt, Chairman of Saltchuk Resources, continues, “On behalf of the Saltchuk organization, we look forward to welcoming more than 1,000 members of the OSG team to our family of companies and growing the enterprise through multi-generational investments.”
Maritime shipping is the cornerstone of global trade, carrying 80% of all goods. Over the past 4 decades, shipping has expanded rapidly: while .1 billion metric tons were shipped in 1980 that figure has ballooned to an estimated 1.95 metric tons in 2021 and an projected market size of $381.69 billion in 2024.
Global shipping has faced a tumultuous few years, however, as Covid-19 lockdowns severely disrupted shipping routes. Massive bottlenecks arose as ports were closed by governments and even many of those still functioning were slowed by a lack of workers. In fact, “in the fall of 2021, 5.7% of the world’s bulk fleet was anchored off Chinese ports due to strict quarantine requirements.” According to the U.S. Wheat Associates. “As the global economy started its recovery from the pandemic, immense port congestion tied up hundreds of vessels, sending dry bulk freight soaring.”
With shipping costs spiking, China’s economy slowing, and geopolitical tensions rising, U.S. imports from China declined starting in 2020, while trade with neighbors Canada and Mexico surged.
As shipping bottlenecks cleared and the global economy cooled, shipping rates returned to traditional levels in 2023 – only to spike again in 2024. In June 2024, spot ocean freight rates from the Far East to the U.S. jumped between 36%-41% over May figures, even as demand slumped, with ocean freight orders down 48%. Analysts point to inflation and Houthis rebel attacks in the Red Sea as the causes of the rapid increase.
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Saltchuk is advised by law firms K&L Gates LLP. OSG is advised by law firm Fried, Frank, Harris, Shriver & Jacobson LLP.
