The global shipping industry has undergone dramatic consolidation in recent years, creating both opportunities and challenges for cargo owners. From delayed shipments to carrier bankruptcies, shippers face increasing volatility in their supply chains as major players merge and form new alliances.
The "Game of Thrones" in Container Shipping: Accelerating Consolidation
The 2016 bankruptcy of Hanjin Shipping served as a wake-up call for the industry, leaving countless cargo owners with stranded shipments and significant losses. Rather than prompting market stabilization, the event accelerated consolidation trends. Data shows the number of major international carriers has shrunk from 20 to just 17 within a year, driven by acquisitions like CMA CGM's purchase of APL and COSCO's integration of CSCL.
This consolidation wave continued through 2017 with notable mergers including Hapag-Lloyd's combination with UASC, Maersk's acquisition of Hamburg Süd, and the joint venture between Japan's NYK, MOL and K Line. The resulting "J-3" alliance began operations in April 2018, further concentrating industry capacity.
Alphaliner analyst Tan Hua Joo notes: "After excluding Hanjin's capacity, the total operated capacity of the top 17 carriers shrank by 1.3% over 12 months. These companies now control 81.2% of global liner capacity." Several carriers saw significant capacity reductions, with Zim (-14.8%), MOL (-10.6%) and K Line (-7.7%) leading the declines.
Turbulence in Trans-Pacific Trade Lanes
Asia-Pacific trade routes face additional disruption as SM Group establishes SM Lines to operate Hanjin's remaining Far East-U.S. services. Meanwhile, existing alliances like "HMM + K2" - combining Hyundai Merchant Marine with Heung-A Shipping and Sinokor Merchant Marine - aim to strengthen competitiveness in intra-Asia trade.
HMM's spokesperson emphasized the alliance's strategic value: "This agreement provides the scale needed to compete against larger carriers." The combined operation fields 102 vessels with total capacity of 474,684 TEUs.
Shipper Survival Strategies: Quality and Diversification
FTR Transportation's Larry Gross suggests new alliances may improve service quality: "Shippers traditionally viewed container shipping as purely commoditized, but now recognize carrier differentiation. We're seeing a quality premium emerge as shippers seek stable partnerships."
Federal Maritime Commissioner William Doyle advises shippers to carefully evaluate contracts and secure financial protections: "After Hanjin's collapse, shippers rightly worry about alliance stability. They should obtain insurance, guarantees or other safeguards when working with new partnerships."
Market speculation about potential acquisitions, including rumors surrounding OOCL, adds urgency to these preparations. While OOCL denied acquisition talks, the uncertainty underscores industry volatility.
Market Outlook: Persistent Challenges Ahead
Drewry's Martin Dixon forecasts continued supply-side pressures through 2018: "Only by 2019 might the industry emerge from its downturn. While consolidation helps, it alone won't solve structural issues." Shippers should prepare for potential 20-40% rate increases in annual contracts.
Boston Consulting Group's analysis suggests carriers face fundamental demand challenges. Senior partner Ulrik Sanders notes: "Container demand growth fell behind global GDP for the first time in 2015, with 2016 growth disappointing at just 1.9%." The firm projects annual growth between 2.2-3.8% through 2020, with capacity overhangs equivalent to 90-150 mega-vessels.
Barr Freight System's Bob Barranco summarizes the paradox: "It's remarkable how these massive global enterprises allowed themselves to deteriorate into financial disarray."
Key Recommendations for Shippers
- Diversify carrier relationships to avoid over-reliance on single providers
- Prioritize service quality alongside pricing considerations
- Maintain open communication with carriers about market developments
- Secure comprehensive insurance against potential disruptions
- Consult logistics experts for customized risk management solutions
As consolidation reshapes global shipping, adaptable shippers who implement these strategies will be best positioned to navigate ongoing market turbulence.