Container Ship Market Consolidation Wave Has Just Begun?

- Jan 18, 2018 -

The seven liner companies will control about 90% of the capacity, but the market is still there are nearly 400 carriers operating, of which more than 100 operators accounted for less than 0.1% of the market, which means that the market still has more M & A potential.

 

Although the shipping industry is moving toward a few shipping companies, most industries are still healthy competition. The shipping company needs to pay close attention to the transactions that affect its main routes.

Drewry, a shipping consulting firm, says there are still nearly 400 carriers still in operation and there are more M & A opportunities in the fierce competition. Glenflange

 

The sharp fall in freight rates in the second half of 2017, far from the underlying supply and demand fundamentals, suggests that the assumption that shipping companies have not escaped some self-sabotage and entering the golden age of the shipping company may be exaggerated.

 

In Durreli's opinion, recent developments show that carriers are heading for a more positive future. However, there are still some temporary factors that are becoming an obstacle to the recovery of the transportation industry.

 

The significant consolidation in the shipping market is expected to bring immediate benefits to the shipping company. The recent wave of consolidation has just begun, with most trades either just over or not yet completed.

 

Following the completion of the transaction, the leading seven shipping groups will control about 90% of the existing container fleet.

 

However, even though such a large fleet is controlled by a handful of shipping companies, the industry is still highly competitive by the standards. According to the known ship data, there are 379 different shipping companies in the shipping market, of which 31% only account for less than 0.1% of the market. This obviously means that the market has more potential for mergers and acquisitions, but in fact professional operators are unlikely to be interested in small operators.Glenflange

 

An analysis conducted in Durlow shows that even after the recent mergers and acquisitions, most CIMCs covered by the transportation industry shifted from "competitive" to "modest concentration".

 

The two trade routes, namely, the Nordic-East Coast South East Europe and South-West Asia routes, now do fit the description of "moderate concentration", with the Herfindahl-Hirschman Index (HHI), which is relatively close to 2500, Low end

The three major routes, namely the two Asia-Europe routes and the Southeast Asia-South America east coast route, are likely to not further consolidate from keeping "competitive" to "modest concentration".

Trans-Pacific, Transatlantic, Asia-Middle East and Asia-South Asia trade routes are still "competitive" on the HHI scale. After the Senlo Merchant Shipping is vested in Asia - the east coast of North America, it will see a corresponding decline in HHI next year.

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