The root cause of this is available capacity exceeding demand, a factor that is exacerbated by weak economic circumstances. This ultimately delivers poor financial results to the majority of lines; a scenario that has been in play for some time now.<\/p>\n
At the same time, in the major deep-sea trades there is the endless pursuit of achieving lower slot costs which has prompted a particularly busy period with the rapid scale up of vessel size and ever larger numbers of these behemoths entering service.<\/p>\n
As of February 2014, there were around 140 vessels of 10,000 teu or over on order representing roughly 30% of the existing world container fleet. Based on this, the prospects of supply and demand balancing in the shipping sector over the near term are weak to say the least. This is further underlined by the reality that \u201cin 2013 global full teu volumes grew by just 2.5% year-on-year to 127m teu\u201d, according to Container Trade Statistics.<\/p>\n
The requirement to fill these larger vessels has also seen lines expand their search for cargo volume and deploy more \u2018flexible\u2019 commercial strategies to capture it. This has played its part in driving down further already weak freight rates. Repeated attempts have been made to apply General Rate Increases but experience shows their effectiveness tends to be short-lived.<\/p>\n
The search for cost savings has also been in evidence. Merger talks have been undertaken by Hapag Lloyd and Hamburg Sud, and more recently and seemingly more successfully between Hapag Loyd and CSAV. COSCO and China Shipping are also reported to be in the initial stages of merger talks.<\/p>\n<\/p>\n
Team work<\/strong> <\/p>\n There is also pursuit of operational consolidation such as the proposed P3 alliance between Maersk, MSC and CMA-CGM. This represents a scaling-up of alliance arrangements and another party treading this path is the G6 Alliance, expanding the co-operation between APL, Hapag Loyd, Hyundai merchant Marine, Mitsui OSK Lines, NYK and OOCL to cover all three major east-west trade lanes.<\/p>\n Then there are what can be called the \u2018extraordinary initiatives\u2019 in pursuit of stability such as Hanjin announcing the sale of container terminals and part of its dry bulk fleet as part of efforts to raise $1.45bn and stabilise its container shipping arm, or Hyundai Merchant Marine also putting the sale of container terminals on its agenda and restructuring its bulk operations. Then there is Neptune Orient Lines, which sold its office building for S$380m and leased it back, and Zim’s owner Israel Corporation conceiving a plan to hand over all its shares to creditors in order to save the company and half its debt. It will also inject $200m into Zim to buy back a 30% stake in the restructured company.<\/p>\n The container shipping sector has traditionally ridden a boom and bust cycle, and there is almost a ‘we\u2019re used to it’ mentality in shipping circles. There is, however, a case to make that the container liner sector is now on the edge of fundamental change on a scale that we have not seen before.<\/p>\n If you consider that, in whatever guise, the big operators are drawing closer and closer together, and that this will result in huge power blocs imposed on top of well formed global networks then it is relevant to ask, what lifetime can the medium or small sized vessel operators expect to have in front of them? Equally, how long will the port and terminal sector, that has long managed to operate at arms\u2019 length from the internal machinations of the shipping sector, be able to stand immune from the structural changes that are underway?<\/p>\n Signs are this era is drawing to a close, presenting new competitive parameters to work in and the prospect of new winners and losers.<\/p>\n","protected":false},"excerpt":{"rendered":" However you add it up the container shipping industry is experiencing turbulent times.<\/p>\n","protected":false},"author":8,"featured_media":9022,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[68],"tags":[],"sponsor":[],"class_list":["post-9021","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-post-script"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=9021"}],"version-history":[{"count":1,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9021\/revisions"}],"predecessor-version":[{"id":9023,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9021\/revisions\/9023"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media\/9022"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=9021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=9021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=9021"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=9021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}