The lemmings are back

Industry Database

COMMENT: The shipping industry is an interesting one; it is one of the least concentrated industries around with far too many players in virtually all sectors, writes Ben Hackett. 

Despite customer complaints about collusion, it is very market driven, driving prices down.

Historically, the industry came to realise that in the world of shipping the only way to overcome a lack of concentration was to form alliances, pools, conferences and slot-swap arrangements, among a host of ways to try to fill ships and to maximise service offerings.

This has also meant that as ships have got bigger, those companies that can least afford them had to order newbuilds.

That brings me to the subject of the lemmings. Not that many months ago, one of the largest carriers announced that the maximum ship size had been achieved and that they would not order any larger vessels. This was followed a few months later with the announcement of an order for nine 22,000 teu ships, followed shortly thereafter by MSC with a similar order for eleven ships.  

Now we have 20 of these vessels on order across two alliances. This leaves THE Alliance out on a limb in a situation that will make it potentially difficult for them to compete on pricing. Maybe a higher reliability can compensate as big ships find it difficult to maintain their schedules with the ever larger interchange of boxes playing havoc in ports.

On the other hand, with little change in the carriers’ management behaviour, we should probably expect to see THE Alliance eventually fall into line and also order similar sized ships.  

Where does this stop? Probably at 24,000 teu ships at which point it becomes questionable for terminal operators to effectively deal with the productivity requirements of the carriers.

Terminal operators have also suffered over the past 10 years, finding it difficult to extract rate increases while at the same time coming under pressure to cater for the larger ships.

The net result of this is that the financial outlook for both carriers and terminal operators is guaranteed to not be rosy for the next year at least, despite anticipated growth in demand this year.


Jade Logistics leads Indonesian ports into a digital future

Christchurch, 06 July 2018 – PT Pelabuhan Indonesia I (Pelindo I) has chosen the terminal operating ... Read more

Gantrex has recently announced the launch of a whole new product category to its portfolio, the TrenchLok™ Cable Trench Cover.

Gantrex’ TrenchLok™ cable trench cover, efficiently and economically protects cranes’ power cables f... Read more

TGI Maritime Software launches «Hazardous» and «Yard Management» modules

TGI Maritime Software launches two complementary modules allowing yard optimization and hazardous co... Read more

Asia’s future energy needs on the agenda at Tank Storage Asia 2018:

Asia’s future energy needs on the agenda at Tank Storage Asia 2018: Read more

Portunus assumes dealership of Dana Spicer in Egypt

Portunus Naem, the Egyptian branch of Portunus Port Spares & services is appointed as official Dana ... Read more

Very first installations by new SFT Spanish office

Our new office in Spain is not even a year old and we already celebrate two successfully completed i... Read more

View all