Maersk Expects Carrier Competition to Shrink to 3 Global Companies
Maersk is the largest carrier by capacity in international shipping and clearly the leader of the industry.
We’ve talked about this before in Universal Cargo’s blog: The moves Maersk makes are copied by the other ocean freight carriers.
When Maersk buys megaships, the industry buys megaships. When Maersk forges an alliance, the whole industry jumps into alliances. When Maersk shifts focus to acquiring smaller competitors… Well, carriers able to do so follow suit.
The ones that are unable to acquire competitors may be the carriers that are acquired.
This is all to say when Maersk says something, the industry listens. And Maersk just said something most carriers probably don’t want to hear. It could mean those carriers won’t be around much longer.
During a recent media briefing, Maersk Chief Operating Officer Soren Toft said that as growth in the shipping industry slows, merger and acquisition activity may begin to pick up again, according to a report from Singapore news outlet the Straits Times.
“We expect that within -- I cannot give a timeframe on it -- that you will see maybe a handful of shipping companies, a little bit similar to what you see in the courier express and parcel industry, where there’re really, you know, three global companies,” Toft was quoted as saying.
Just three global companies!
And even though Toft “cannot” put a timeframe on carrier competition shrinking to this level, it sure sounded like he wanted to. Like Maersk expects this to happen relatively quickly.
We’ve seen carriers struggle financially over the last several years, resulting in acquisitions, mergers, Hanjin’s collapse, and carrier alliances.
The desperation of carriers to join alliances in order to reduce costs and simply survive has made the industry dominated by just three alliances. Of course, Maersk isn’t saying three alliances will dominate shipping, but just three companies.
For years, I’ve been writing in this blog that overcapacity, low freight rates, and carrier financial struggles will eventually lead to such a reduced level of competition in ocean shipping that it would be bad for shippers in terms of freight rate pricing.
Because of this, the words of Maersk’s COO don’t come as that big of a surprise. All you have to do is read some of the Universal Cargo blogs over several years to see plenty of evidence that the industry is well on its way to the level of carrier competition Maersk predicts.
In fact, just reading the blog headlines below (and there are even more than these) is enough to see carriers are struggling and competition is majorly shrinking in ocean shipping. Of course, you can also click on the titles to read the corresponding blogs.
- MAERSK TO OUTLAST COMPETITORS IN FACE OF LOWER FREIGHT RATES?
- MAERSK STILL TOP DOG DESPITE Q1 $66M LOSS
- DIVIDE & CONQUER: MAERSK SPLITS TO GO AFTER COMPETITION
- HAPAG-LLOYD CSAV SIGN MERGER: NOW 4TH LARGEST SHIPPING CARRIER
- CARVING CARRIER COMPETITION: COSCO & CHINA SHIPPING FORM ALLIANCE
- HERE COMES CHINA COSCO SHIPPING CORPORATION, SHIPPING LEVIATHAN
- SHRINKING CARRIER COMPETITION: COSCO BUYING OOCL
- EVER SHRINKING CARRIER COMPETITION – HAPAG-LLOYD AND CSAV MERGING
- SHRINKING CARRIER COMPETITION: JAPAN’S 3 BIG CARRIERS MERGING
- JAPAN’S BIG 3 BECOMING ONE IN PRACTICE & NAME
- MAERSK ACQUIRING HAMBURG SÜD!
- CMA CGM BUYING MERCOSUL AS MAERSK IS FORCED TO SELL
- SHRINKING CARRIER COMPETITION: HMM HEADED FOR RECEIVERSHIP
- HYUNDAI MERCHANT MARINE KEEPS AFLOAT
- S. KOREAN CARRIERS HANJIN & HMM COULD BE FORCED INTO MERGER
- HANJIN COLLAPSES – HOW BADLY WILL IT HURT U.S. SHIPPERS?
- HANJIN ASIA-U.S. ASSETS FOR SALE & WHAT IT MEANS
- HANJIN SELLS STAKE IN TERMINAL AT PORT OF LONG BEACH TO MSC
- SURPRISE MOVE – KOREA LINE BUYING HANJIN’S ASIA-US ASSETS
- SM LINE TO REPLACE HANJIN, BUT WILL YANG MING FOLLOW HANJIN’S FOOTSTEPS?
- THERE’S HIGH RISK OF MORE CARRIER COLLAPSES SAYS DREWRY
- BIG CARRIER ALLIANCE SHAKE-UP IS COMING!
- CMA CGM FORMS OCEAN THREE ALLIANCE WITH UASC & CHINA SHIPPING
- AND THEN THERE WERE 3… CARRIER ALLIANCES
- IS THERE TROUBLE IN 2M ALLIANCE?
- IS THE ALLIANCE IN TROUBLE?
- HUNGER GAMES OF THE SEA: G6, P3, & CKYH ALLIANCES FIGHT FOR SHIPPING DOMINANCE
- CATCHING FIRE ON THE SEA: INTERNATIONAL SHIPPING MOVES & COUNTER MOVES
- MOCKINGJAY ASKS WHAT EFFECT DO CARRIER ALLIANCES HAVE ON SHIPPERS?
- MOVIES OVER BUT HUNGER GAMES OF THE SEA CONTINUE W/ MERGER & BUYOUT
While only three global ocean carriers dominating international shipping is a very small number, it is more likely a question of when that will be the case than if that will become the case.