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.

LATEST PRESS RELEASES

Successful participation and presentation at exhibition in Beira, Mozambique

The exhibition series ‘Intermodal Africa’ organized by Transport Events is always a good possibility... Read more

Protectors of Esbjerg's new East Port quay

The German based Headquarters of ShibataFenderTeam recently completed an order for the Port of Esbje... Read more

Aquaplot joins Technology Transfer Programme of European Space Agency

Start-up for ocean route planning enters ESA’s Business Incubation Centre (BIC) Read more

AMRO Increases Scope To Cover The GCC Region

AMRO, a specialist marine equipment and services provider, is proud to announce that they will now c... Read more

SAFE AND SECURE

Ninth Consecutive “Excellent” Coast Guard Security Assessment Awarded to Port of Baltimore Read more

Being part of the most important infrastructure project in Costa Rica

In 2017, the US office of ShibataFenderTeam delivered 55 nos. CSS 1450 Cell Fender Systems (G2.0), 8... Read more

View all