Executive Briefings

As Ocean Carriers Undergo Historic Consolidation, Shippers Could See Rates Increase

The container shipping industry is undergoing a historic wave of consolidation as carriers seek to tighten supply to offset the historical drop in pricing.

However, the caveat for the supply chain is that those paying for shipping could eventually see price hikes as a result. Also, some carriers continue to increase their capacity by adding megaships to their fleets, which could disrupt the supply chain in a negative way.

In the immediate future, container shipping companies this year are aggressively seeking to slash industry capacity through mergers.

These include:

France-based CMA-CGM, which has an 8 percent share in the container shipping market and is the third-largest container shipping company worldwide, recently received approval from the European Commission to acquire APL Neptune Orient Lines based in Singapore.

The ongoing merger between China Ocean Shipping Group Company and China Shipping Container Lines Co., ranked sixth and seventh worldwide respectively; will make China's two-largest shipping companies the fourth-largest player worldwide.

Meanwhile, in July, Hapag-Lloyd, Germany’s largest shipping company, merged with Dubai-based United Arab Shipping Company (UASC), making Hapag-Lloyd the fifth-largest container shipping line in the world with 237 vessels and a total transport capacity of around 1.6 million twenty-foot container units, according to UASC.

Hapag-Lloyd, South Korea’s Hanjin Shipping, Taiwan-based Yang Ming Marine Transport Co., and Japanese carriers Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, and Nippon Yusen Kabushiki have also agreed to share capacity. In a statement, Hapag-Lloyd recently said that alliance will create “one of the leading networks in the container shipping industry,” with a combined total of 3.5 million TEUs or 18 percent share of the global container fleet capacity. All six partners operate fleets with more than 620 ships in total.

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However, the caveat for the supply chain is that those paying for shipping could eventually see price hikes as a result. Also, some carriers continue to increase their capacity by adding megaships to their fleets, which could disrupt the supply chain in a negative way.

In the immediate future, container shipping companies this year are aggressively seeking to slash industry capacity through mergers.

These include:

France-based CMA-CGM, which has an 8 percent share in the container shipping market and is the third-largest container shipping company worldwide, recently received approval from the European Commission to acquire APL Neptune Orient Lines based in Singapore.

The ongoing merger between China Ocean Shipping Group Company and China Shipping Container Lines Co., ranked sixth and seventh worldwide respectively; will make China's two-largest shipping companies the fourth-largest player worldwide.

Meanwhile, in July, Hapag-Lloyd, Germany’s largest shipping company, merged with Dubai-based United Arab Shipping Company (UASC), making Hapag-Lloyd the fifth-largest container shipping line in the world with 237 vessels and a total transport capacity of around 1.6 million twenty-foot container units, according to UASC.

Hapag-Lloyd, South Korea’s Hanjin Shipping, Taiwan-based Yang Ming Marine Transport Co., and Japanese carriers Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, and Nippon Yusen Kabushiki have also agreed to share capacity. In a statement, Hapag-Lloyd recently said that alliance will create “one of the leading networks in the container shipping industry,” with a combined total of 3.5 million TEUs or 18 percent share of the global container fleet capacity. All six partners operate fleets with more than 620 ships in total.

Read Full Article