The world is seeing widespread consolidation, such as the Cosco & China Shipping merger, the Ocean Alliance of Orient Overseas & Cosco, CMA CGM acquiring NOL (APL), Hapag-Lloyd merging with United Arab Shipping, Maersk acquiring Hamburg Sud, soon to be Japanese lines merger of NYK/MOL/K-Line & a rumoured merger between Evergreen & Yang Ming. With a series of buyouts, mergers & alliances “the future is now” in the container shipping industry.
In recent years, many of the container shipping lines took an opportunistic approach & began developing & ordering ultra-large container vessels. Although, the increase in container ship size & transit speed was positive, the impact of the rush to construct new mega-ships resulted in an imbalance of supply & demand for shipping lines. As capacity piled up, shipping lines attempted to under-cut each other’s freight rates to attract customers. Unfortunately, continued market slowdown, coupled with depressed freight rates, has seen profits tank, plummeting the shipping industry into a slump.
With excess capacity on the rise, global shipping companies have been joining forces to cut costs & improve efficiency in order to weather out the storm. The model of increasing capacity by building more mega-ships has contributed to the destabilization of the container-moving business & has forced the need for industry restructuring.
Even though the container shipping industry continues to move the majority of the world’s manufactured goods, overcapacity & unrelenting financial losses has driven container shipping companies to join forces in an attempt to save operational costs by sharing ships, networks & port calls.
However, even with the many mergers, acquisitions & alliances taking place, many ocean carriers remain in a weak position as they continue to compete for business & market share, thus placing further downward pressure on freight rates. Although not an ideal situation for the container shipping lines or shipping industry as a whole, freight rates have never been better for Importers & Exporters!
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