Sunday, April 17, 2011

Shipping consolidation

The global container market is poised to consolidate in the next few years as AP Moller Maersk and other major shippers roll out bigger vessels, potentially forcing smaller rivals to drop out of an already oversupplied market.
Medium-sized container firms warn that a move by the majors to flood the market with mega ships could spark a “rate war” similar to 2009 when the market plummeted and most firms fell into the red in one of the industry’s worst downturns.
“We believe that ... the largest shipping companies will continue to expand the scale of economies of the industry,” said Thomas Knudsen, Maersk Line’s chief executive for Asia-Pacific region, at an industry conference in Singapore. “As we drive these scales of economy, it will be difficult for the smaller carriers in these industries to compete. That will drive consolidation.”
Maersk, the world’s top container shipper which holds a 15% share of the container market, is expanding its fleet by around 8% annually to keep up with economic growth.
“We are not doing this aiming at taking market share,” Maersk chief executive Nils Andersen told reporters at an industry event. He agreed that consolidation would be the most likely outcome.
One of Maersk Line’s container ships.
Industry leaders in the container markets have placed multi-billion dollar orders for the world’s biggest vessels to meet growing demand in Europe and the United States for Chinese manufactured goods.