Negotiation Between Cosco and Boston Harbor

Negotiation between COSCO and Boston Harbor

▲Date: May, 2001-August, 2001

▲Location: Boston, Massachusetts

▲Introduction of negotiators

China Ocean Shipping (Group) Company, known as COSCO or COSCO Group, is one of the largest liner shipping companies worldwide. It is a government owned company of the People's Republic of China.

Boston Harbor is a natural harbor and estuary of Massachusetts Bay, and is located adjacent to the city of Boston, Massachusetts. It is home to the Port of Boston, a major shipping facility in the northeast of America.

▲Background of the negotiation

Date back to 1998, COSCO struggled to launch into American market. COSCO successfully negotiated with Long Beach government to lease the abandoned Long Beach Naval Station. But congress killed the deal out of security concern. In addition, since 1950s, Federal Maritime Commission listed COSCO as the controlled carrier which could adjust the price 30 days later, while common carrier could make the adjustment in 24 hours. Hence, COSCO is always striving to break the ice in the American market.

In 2000, just as the global shipping market bottomed out and was followed shortly after by the events of Sept. 11, several shipping companies' businesses shrank, one by one removing their routes to Boston. Boston Harbor subsequently fell into a crisis, and it seemed highly likely that 9,000 workers would face widespread unemployment. Consequently, high-level officials from the Massachusetts state government wrote to China Ocean Shipping Company asking for aid in Jan 26th, 2001, hoping that the central Chinese enterprise would be able to lend a hand to its struggling Bostonian “blue-collar brethren.”

Wei Jiafu, the Chief Executive Officer and President of COSCO, thought it was a rare opportunity for COSCO. Apparently, if COSCO could get access to Boston Harbor, it would mean a lot. In May 27th 2001, Wei Jiafu and his team landed in Boston and the negotiation officially started....