Big Carriers Reduce North-South Options

Drewry Maritime Research
Monday, January 13, 2014
Source: Drewry Maritime Research

Maritime research company, Drewry, said in this week’s container insight report that it is not just on the East-West routes that big container lines are consolidating, but consortia have also been expanding in North-South tradelanes, thereby reducing the number of weekly services available to shippers.

Hapag-Lloyd’s recent reduction in the number of weekly services offered to customers between Northern Europe and the East Coast of South America through slot charters is just another step towards carrier and joint service consolidation in the North-South trades. It is not just niche-market players who have been struggling on the routes, although they have clearly felt most of the pain so far (see Table 1), implying that greater structural changes lie ahead.

Whatever form these changes take, including the possible extension of East-West alliances, shippers will already be concerned by the dramatic decrease in services offered by ocean carriers. Over the past five years, the number of separate strings offered between Europe and ECSA alone fell from 13 to eight (including two fortnightly con-ro services offered by Grimaldi Lines). In the interim, only Costa/Maruba fell by the wayside, so the rest were lost through consortia expansion.

Tables 2 and 3 shows the omnipresent way that consortia have spread their tentacles between Europe and ECSA since 01 July 2008, with Maersk, MSC and CMA CGM separately ending up with 72% of all vessel capacity on 1 November 2013, and Hamburg Sud another 4%, although much of this is offered to other lines through slot charters. Hapag-Lloyd’s arrangement with MSC’s ECSA service is no longer one of these, however.

In the tradelane between Asia and ECSA, the corresponding reduction in services was from 10 to six, but Maersk, MSC, CMA CGM and Hamburg Sud have independently only ended up with 48% of all vessel capacity.

The consolidation process has been spurred on by the cascading of much bigger ships no longer required in East-West trades due to weak cargo growth in 2012 and 2013, which will not last forever.

The danger of such declines in shipper choice is highlighted in UNCTAD’s latest Review of Maritime Transport 2013, including East-West trades, which states: “Based on UNCTAD’s Liner Shipping Connectivity Index (LSCI), the average number of carriers per country has decreased by 27% over the past decade, from 22 in 2004 to 16 in early 2013. This reduction in choice among shippers poses challenges, especially for smaller developing countries, which are confronted with potentially oligopolistic markets”.

In Drewry’s view, most of this consolidation took place in North-South tradelanes, where many niche market players have either folded or been taken over (see Table 1).

According to Drewry, the significance of the service rationalization that has been taking place in the North-south trades is that whilst regulatory authorities are considering whether or not the P3 and G6 alliance extension should be allowed in the East-West trades, shippers have already been confronted with many partner lines sharing vessels to similar extents – but without major protest so far.

drewry.co.uk
 

  • Source: Drewry Maritime Research

    Source: Drewry Maritime Research

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Container Ships

Young Taken on PESA Advisory Board

Hoover Container Solutions’ chairman and CEO, Donald Young, has been nominated and elected to the Petroleum Equipment & Services Association (PESA) Advisory Board for a three-year term.

Asia-N.Europe Box Rates Fall 8.1 pct

Freight rates for transporting containers from ports in Asia to Northern Europe fell 8.1 percent to $713 per 20-foot container (TEU) in the week ended on Friday,

G6 Updates Asia-North America West Coast Service

Two services will be merged into one until further notice / Reason is change in market demand / All other services remain unchanged. Members of the G6 Alliance

News

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

ASEAN in Discord Ahead of Meeting with top China, U.S. Diplomats

Southeast Asian nations were thrown into disarray after Cambodia on Saturday blocked them from issuing a statement referring to an international court ruling against

Logistics

Global Fleet Growth: A More Mature Trend?

The supply of ships into the fleet is a key determinant of vessel earnings across the shipping sectors, and world fleet growth is closely followed by everyone in the maritime industry,

Cosco: No to Shark Fin

China's biggest shipping and logistics company Cosco has pledged a total ban on transporting shark's fins,  says SCMP. It called the move a "body blow" to the international shark's fin trade.

Seaborne Transportation - Economy Without Borders

With seaborne transportation accounting for the vast majority of the world’s international trade, the importance of the shipping industry to the mechanics of the

 
 
Maritime Standards Navigation Offshore Oil Pipelines Salvage Ship Electronics Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1195 sec (8 req/sec)