GERMANY's Hapag-Lloyd has announced that it has signed a memorandum of understanding with the Chile's Cia Sud Americana de Vapores (CSAV) about combining the container shipping operations of the two companies.

"Both companies have signed a Memorandum of Understanding, which is not binding. As the next step, the due diligence will take place, after which a binding contract could follow," said the Hapag-Lloyd statement.

CSAV, controlled by Chile's Luksics family with its 46 per cent stake, has signed an agreement that would create the world's fourth-largest container shipping company.

CSAV would own 30 per cent of the combined company, said a regulatory filing released after the close of trading.

CSAV would join German billionaire Klaus-Michael Kuehne and the City of Hamburg in a shareholder pact that will control a total of 75.5 per cent of the company.

Mr Kuehne, who also controls Swiss forwarding giant Kuehne + Nagel, owns a 28 per cent of Hapag-Lloyd, and has long demanded talks about Hapag-Lloyd's future after merger talks with its German rival Hamburg Sud failed in March.

"This is positive as it will create a much larger player," said Jorge Sepulveda, an equity analyst at Santiago brokerage EuroAmerica.

CSAV and Hapag-Lloyd would lift one million TEU a year and generate estimated combined annual revenue of US$12 billion, said Bloomberg.