When I started writing for this website, I did so because I could see we were in the starting blocks of the industry finally beginning to consolidate and reduce the number of global carriers to a more realistic level.
Billions of dollars go through this industry each year (the Top 3 carriers each have revenues of about $25bn per year) but the returns on those investments are pitiful and it is finally beginning to dawn on both the management of the carriers and the shareholders that the current way of working is simply unsustainable.
So, as a carrier, what are your options?
Join an alliance in order to give yourself much more global coverage
Build more ships and try to capture more market share
Consider acquiring or merging with you rivals
Consider selling the company to a bigger rival and get out of the game completely
Go bankrupt in spectacular fashion
Now you have the options in front of you, what do you think carriers should do? Well, actually the answer is “all of the above”
2M, Ocean Alliance and THE Alliance are either up and running or gearing up for a relatively fast start in 2017.
COSCON (Ex COSCO and CSCL merged together) are on a newbuilding spree that will add about half a million TEU to an already saturated market.
Maersk Line have announced that they will stop all newbuildings (although they still have the upgraded EEE vessels being built in DSME Korea, estimated capacity of around 21,000 TEU, based on the new height of the lashing bridges). They will then turn their attention to buying up smaller rivals as a way of keeping the overall market capacity level whilst, at the same time, making their share of the capacity larger.
The three Japanese Carriers: NYK Line, MOL and K Line have announced they will merge their container activities into one company as of July 2017. This has been on the cards for a long time but finally they’ve made the push to get it done.
Mergers and Acquisitions this year is getting ever more interesting by the day:
CMA CGM buys NOL/APL
COSCO/CSCL merge into COSCON
Hapag Lloyd and UASC agree on merger terms
J3 (as we are calling it for now) NYK, MOL and K Line agree to merge
Hyundai possibly being waved towards Maersk to see if they are interested
Several reports have begun to surface this week of Zim Line looking to off-load their global network to someone and begin to focus just on Mediterranean services to and from Israel. This is something I wrote about a while back.
Finally, there is the Hanjin case. Go bankrupt in spectacular fashion. Let’s be clear, nobody wants a repeat of that fiasco.
So there you have it, this is my five minute guide to what is going on in the container shipping industry right now. This story is far from over and even though we are seeing unprecedented levels of consolidation, it still won’t be enough.
Let’s see how the rest of this unfolds………