Shippers could face fewer choices and higher rates in the long run as the container shipping world continues shrinking due to an increase in merger and acquisitions and carrier failures, according to shipping consultancy Drewry.
Following Hanjin Shipping’s filing for court receivership, the container carrier may continue as a regional Intra-Asia carrier if its survival plan is successful, but its days of being a leading global player in the Top 20 are over, Drewry said.
Other brands that have effectively disappeared from the upper echelons of carrier rankings this summer include China Shipping Container Lines (CSCL) after its merger with Cosco, while Singapore-based container shipping company APL and United Arab Shipping Company (UASC) are now merely sub-brands within larger companies after deals with CMA CGM and Hapag-Lloyd, respectively.
Drewry said that, if both APL and UASC are included within their new parents, the Top 5 ocean carriers now control approximately 54% of the world’s containership fleet.
Back in 2005 that share was around 36% and while the trend for greater concentration has steadily been rising over the past 10 years it was the recent M&A activity that pushed it past the 50% threshold.
“This trend will continue as the leading five carriers have the largest orderbooks and, as history has shown, the biggest appetite to acquire other carriers,” according to the shipping consultancy.
Ultimately, this will mean less competition for shippers to choose from. Economic principles suggest that fewer competitors should mean higher prices or the risk of higher prices, although container freight rates have yet to follow this dictum.
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.