Gloomy Outlook for Box Shipping?
As carriers withdraw from unprofitable routes, is there really too little competition in container shipping?
A new report from UNCTAD highlights risks to competition in the container sector, specifically for smaller nations, says Drewry.
The Review of Maritime Transport 2015 correctly identifies the growing control of vessel capacity among the leading container lines, and goes on to suggest that the search for economies of scale through the introduction of bigger ships explains why there are fewer carriers in individual markets.
According to UNCTAD’s research there is now an average of 15.7 carriers providing services to each country’s ports, down from 22.1 in 2004. UNCTAD identified 32 countries (mostly small island states) with fewer than four carriers calling at their ports, up from 22 back in 2004.
“The average vessel size per country will continue to grow and so we expect there will be fewer companies in individual markets, and this is an increasing challenge for the smallest players,” Jan Hoffmann, head of trade facilitation at UNCTAD, told Reuters.
While Drewry agrees with the basic thesis that in general countries will be served by fewer carriers in the future, we disagree with the drivers of this trend as proposed by the UNCTAD report.
The rise of the mega-ships does not explain why smaller countries such as Samoa or Iceland are less well served as these ships were never intended to call at these more remote outposts. They simply lack sufficient volumes to attract more than a handful of lines.
