CHILE's Compania Sudamericana de Vapores (CSAV) stock surged the most in more than a year after Die Welt newspaper reported that Latin America's biggest container shipping line was in merger talks with Germany's Hapag-Lloyd, the world's sixth largest carrier.

While nothing official has been said about merger, a Hapag-Lloyd press release stated: "Hapag-Lloyd and CSAV are currently maintaining discussions if a possible business combination or any other form of association would be of mutual interest. To date, these discussions have not resulted in any binding or non-binding agreement."

Santiago-based CSAV executives met last month in Miami to discuss the tie-up, Die Welt reported, quoting an unidentified Hapag-Lloyd official.

CSAV, the 20th largest container carrier, suffered an 86 per cent loss in the past three years, which is the worst performance among peers tracked by Bloomberg.

In response to a glut of new vessels, operators such as AP Moller Maersk are forming alliances with competitors to lower costs and eliminate excess capacity on trade routes.

The billionaire Luksic family controls Valparaiso with a 46 per cent. The Luksic's holding company Quinenco SA has put more than US$1 billion into CSAV in the past two years after the company lost a record $1.25 billion in 2011.

CSAV's press office didn't respond to a phone call seeking comment.

Hapag-Lloyd is owned by a group of shareholders including German tourism company TUI and HSH Nordbank. Hapag-Lloyd spokeswoman Eva Gjersvik didn't immediately respond to an e-mail seeking comment.

Hapag-Lloyd is part of the G6 alliance which is making plans to compete with the P3 Network made up of Maersk, MSC and CMA CGM with 37 per cent of the global market share. The G6, made up of Hapag-Lloyd, APL, Hyundai Merchant Marine, MOL, NYK and OOCL, has 17.6 per cent of the global market.