2009 State of Logistics: Is the worst finally over for ocean carriers?
Patrick Burnson, Executive Editor -- Logistics Management, 7/1/2009
Just how bad has container shipping been doing lately? MOL was quick to shoot down the false news service report that it would get out of the business to focus on other parts of its operations; but the fact that the story ran at all caused some alarm in the industry.
Meanwhile, container shipping analysts and industry leaders are telling shippers that the worst may be over. While it’s a little early in the recovery game, there are indications that they just may be on to something. “We don’t think that there will be any container lines going out of business any time soon,” says Edward Zaninelli, vice president of transpacific westbound trade for OOCL. “There are too many 'Catch-22s’ for that to happen. But we will see more slot-sharing and consolidation, and rates have got to go up…that’s a given.”
Indeed, the fleet of idled container vessels owned by OOCL and other carriers is shrinking as many of the larger ships are being brought back into service to handle the seasonal rise in cargo volumes. According to ASX-Alphaliner, the idled carrier-owned fleet has fallen from a peak of 241 ships of 1.04 million twenty-foot-equivalent units (TEU) in March to 199 vessels of 790,000 TEU.
Among the trends to watch, says Zaninelli, will be for carriers using more all-water services which avoid both the Suez and Panama Canals. “We’ll see more 'slow steaming’ around the Cape and Horn as vessel operators seek ways to save on fuel costs, which will be rising again,” he says.
And according to Zaninelli, that figures into to the higher rate equation, too, he adds. Rising crude prices mean a boost in bunker fuel prices, but it’s the currency imbalance that really hurts the carriers, explains Zaninelli. “The weak dollar has just been killing us,” he says. “Revenue is below cost in all trade lanes now, and the recovery is just beginning. Asia and the U.S. will be the first economic zones to see growth in 2010, but the EU is going to take longer.”
Carriers are positioning themselves for this slow rebound by bringing ships out of lay-ups, he says, but it’s a time-consuming process. Zaninelli also notes that shippers will see some “funny marriages” as various nation states cooperate on vessel sharing to grab more market share. “When China [with China Shipping Lines] and Taiwan [with Evergreen] agree to get together, you know the situation has become desperate,” he says.
According to AXS-Alphaliner analysts, Maersk Line is back in the market share lead after falling behind a few years ago. “The AP Moller-Maersk fleet will have doubled its capacity since December 2004,” notes Stephen Fletcher, commercial director for AXS-Alphaliner, part of AXSMarine.
He says that in the first four months of 2009, the Danish company’s containership fleet grew by 6.3 percent to put its market share at 16.3 percent. Over the same period, he adds, MSC’s fleet capacity increased by 4.2 percent, while CMA CGM’s rose by 2 percent. The world’s top three grew their combined market share from 32.1 percent to 34.1 percent in 2007. But the message, says Fletcher, is not entirely positive, as prices are likely “to get a boost” during peak season.
| Rank | Operator | TEU | Share |
| 1 | APM-Maersk | 2,047,925 | 15.2% |
| 2 | Mediterranean Shg Co | 1,524,495 | 11.3% |
| 3 | CMA CGM Group | 983,710 | 7.3% |
| 4 | Evergreen Line | 615,921 | 4.6% |
| 5 | APL | 508,816 | 3.8% |
| 6 | COSCO Container L. | 503,901 | 3.8% |
| 7 | Hapag-Lloyd | 491,854 | 3.7% |
| 8 | CSCL | 460,785 | 3.4% |
| 9 | NYK | 415,246 | 3.1% |
| 10 | Hanjin Shipping | 380,789 | 2.8% |
| 11 | OOCL | 347,251 | 2.6% |
| 12 | MOL | 344,061 | 2.6% |
| 13 | Hamburg Süd Group | 333,188 | 2.5% |
| 14 | K Line | 324,663 | 2.4% |
| 15 | Yang Ming Line | 318,035 | 2.4% |
| 16 | CSAV Group | 282,027 | 2.1% |
| 17 | Hyundai M.M. | 278,559 | 2.1% |
| 18 | Zim | 270,549 | 2.0% |
| 19 | PIL (Pacific Int. Line) | 189,535 | 1.4% |
| 20 | UASC | 157,107 | 1.2% |
| 21 | Wan Hai Lines | 125,002 | 0.9% |
| 22 | MISC Berhad | 99,473 | 0.7% |
| 23 | IRIS Lines | 96,929 | 0.7% |
| 24 | RCL (Regional Container L.) | 55,742 | 0.4% |
| 25 | Grimaldi (Napoli) | 49,606 | 0.4% |
| 26 | CCNI | 48,778 | 0.4% |
| 27 | Sea Consortiu | 45,665 | 0.3% |
| 28 | TS Lines | 44,965 | 0.3% |
| 29 | Swire Shipping | 39,572 | 0.3% |
| 30 | Maruba + CLAN | 38,362 | 0.3% |
| All information above is given as guidance only and in good faith without guarantee | |||
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