At the start of April, the commencement of joint operations between the major Japanese liner companies in the form of ‘ONE’ ushered in the latest step along the road in the consolidation of the container shipping sector. In February 2017 we took a look at how the concentration in the sector was evolving, and now seems like a good time to review how the profile looks today.
A New Look
The start of joint operations as of April 2018 between major Japanese containership operators NYK, MOL and K-Line, as the ‘Ocean Network Express’ was another milestone in the ongoing consolidation of the box shipping sector. Recent years have seen the acceleration of this trend, with significant merger and acquisition activity, and now looks like an appropriate time to reflect how the changes have left the sector shaping up. The red line on the graph shows the profile today of the top 20 boxship operators by share of total fleet capacity deployed, The blue line shows the same profile 20 years ago. What do the curves tell us?
Many Hands Made Light Work?
In 1998, the profile looked very different to today. Back then, the top 20 carriers accounted for 73% of deployed capacity globally, with the largest (Maersk) with a 7.2% share and the carrier ranked 20th (CSAV) with 1.3%. The top 20 included some famous old names (P&O Nedlloyd, Sealand, APL, Cho Yang, CSAV), and was essentially made up of the global carriers of the day. The list of carriers ranked 21-30 also contained some carriers still well-known today: Wan Hai, Crowley, Matson and PIL (ranked 30th) as well as carriers since notably merged with others such as Safmarine, UASC, Hamburg-Sud, Delmas and MISC.
Were There Too Many Cooks?
Things look very different today. The top 20 now account for 90% of all capacity, and the top 10 for a mighty 83%. The largest carrier (still Maersk) now accounts for 19.4%, but the carrier ranked 10th (Zim) for 1.8% and the 20th (Quanzhou Ansheng) just 0.3%. The realm of global carriers is now basically the top 10. PIL, the largest regional carrier is ranked 11th, and outside of the top 10 only HMM could really be considered a global player.
Two To Tango
This profile is the result of an era of major consolidation, which looks like it might take a breather as and when the merger of OOCL with China COSCO Shipping is completed. The scope of the liner companies’ cost base and the perceived benefits from economies of scale have led to a slimming of the number of major operators long considered inevitable by many.
Numbers Down, And Up
So, whether this is the end game or not, we now appear to have reached a point in time where the box shipping business has a distinctly changed profile, amongst the most consolidated in shipping. A heavyweight top 10 carriers operates 10.4 times the capacity of the carriers ranked 11-20, compared to 2.4 times 20 years ago. How this all works out for this challenging sector remains to be seen, but for now container shipping is embracing its new look. Have a nice day.