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Recent developments, including the proposed merger of Hapag-Lloyd and CSAV, US regulatory approval of the P3 Network, and the expansion of the CKYH alliance to include Evergreen will all add to the pressure on smaller operators to consolidate.
Despite overcapacity, around 80 percent of the new-build orders at end-2013 were for larger vessels, which are estimated to be up to 25 percent more cost efficient. However, mega ships are largely limited to Asia-Europe trading lanes. Demand growth in these lanes was soft in 2013 and likely improvement from 2014 may be insufficient to absorb the new capacity of mega ships scheduled for delivery within the next two to three years. In addition, their full cost efficiency can only be reached if utilization rates are high.
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