Ocean Carriers: 50 players to watch
This time last year analysts were predicting that “second tier” carriers would begin drifting toward the top of the list—and indeed that has been the trend. However, this year we evaluate the Top 50 and see that the big just keep getting bigger.
By Patrick Burnson, Executive Editor -- Logistics Management, 10/1/2008
When examining the ocean carrier industry, the big just keep getting bigger, say today’s maritime experts, while competition for market share remains heated at the bottom where rationalization of sailings and shared terminal resources will be needed by many carriers if they are to survive.
Indeed, the large global piece of this enterprise still belongs to the three world leading carriers—Maersk Line, MSC, and CMA CGM—which, when combined, has grown from 32.1 percent to 34.1 percent in terms of twenty-equivalent unit (TEU) capacity over the past year. And historical perspective indicates that a certain Danish carrier is resurgent.
“Taking the eight-year old figures of 2000 as a comparison, the three leading lines at the time, Maersk Sealand, Evergreen, and P&O Nedlloyd, had a combined market share of 23.7 percent,” observes Steven Fletcher, commercial director for AXS Marine, an ocean cargo analyst firm based in Paris. “However, the growth in 2007 was far from being equally shared by the three leading lines, since Maersk Line was restructuring.”
According to the latest figures published in AXS-Alphaliner’s annual survey (Liner Market Shares/www.axs-alphaliner.com.) that examines the evolution of the global liner market shares, that restructure is now complete. “During the first eight months of 2008, Maersk’s operated fleet grew by 6.3 percent, which is the best growth rate achieved among the top five carriers,” says Fletcher.
But Maersk’s group CEO Nils Andersen maintains that the container shipping and related activities divisions—comprising Maersk Line, Safmarine, Maersk Logistics/Damco, and inland services—only improved marginally in “difficult market conditions” over this period. He says that the entire enterprise will come under severe pressure in the remainder of the year with the global economic downturn, falling freight rates, high bunker costs, and potential excess vessel capacity.
Still, the group’s net result from container activities after six months of 2008 was $73 million, an improvement from a loss of $219 million in the same period a year ago. Andersen notes that the company is prepared to lose some market in the short term if it improves profitability.
“Given the present market conditions, we are quite pleased that we don’t have the largest order book coming on stream for the next couple of years,” he says. “That means we will have to accept some loss of market share. We want to make it as little as possible, but we want to reach that objective through a better utilization rate. Of course, over time we want to grow with the market but it’s not a short-term priority,” Andersen adds.
This is in keeping with observations made by Fletcher, who says in his report that Maersk has been inactive on the ordering side for a while, although in this respect, it is far from alone: “Carriers are obviously taking a breath after last year’s hectic ordering activity.”
Furthermore, he says, Maersk is not in a position to maintain its market share over 16 percent in the medium term (2009-2011), unless vigorous chartering activity helps to keep the pace of its competitors. “Quite remarkably, MSC and CMA CGM are among the very few carriers which are family businesses and thus do not have to bow to shareholder pressure,” says Fletcher. “They are also the best placed to still increase their market share, with huge orderbooks dwarfing those of rivals.”
Rising stars & old stalwarts
According to Fletcher, the three rising stars this decade are CMA CGM, MSC, and CSCL. “This trio deserves a particular mention as these lines grew organically for the most part, although CMA CGM bought a few niche carriers,” he says.
Evergreen, has grown modestly over the past year, but is being recognized for its service enhancements by some of the nation’s largest shippers. Wal-Mart Stores Inc., for example, chose it as International Ocean Carrier of the Year for 2007-2008. Spokesmen for the giant retailer say that even during peak seasons the Taiwanese carrier provided consistent coordination and reliable performance.
High shipper marks were given to Hapag-Lloyd AG, for making Customs clearance faster this year. By obtaining the Authorized Economic Operator (AEO) Certificate, U.S. exporters were able to get goods to market from plants here and in Asia in a much more time-efficient manner. Given the fact that the carrier is still for sale, however, its fortunes remain unclear.
And while a slowdown in shipping volumes and a rapid cyclical downturn in container shipping in the Transpacific triggered concerns over its earning growth in the second half of the year, COSCO, too, is making money. Financial analysts note that China COSCO Holdings—the flagship of the country’s premier shipping conglomerate—beat forecasts to more than double its first-half earnings as China’s unabated demand for resources and materials lifted freight rates.
APL, the core container shipping business of Neptune Orient Lines Limited (NOL), may grow larger still if a bid to acquire Hapag-Lloyd takes hold. APL, saw revenues rise 32 percent to $3.94 billion for the first half of this year, carrying record volumes of 1.27 million FEU (forty-foot equivalent unit) in during that time frame. But spokesmen are hardly bullish on the immediate future.
“The combination of continuing growth in container volumes and effective yield management enabled APL to deliver an improved earnings performance for the half year, although there was a decline in the results for the second quarter,” notes APL’s CEO, Ron Widdows. “Costs, particularly for fuel, have continued to escalate.”
Economic pressure will continue
Ocean liners comprising the rest of the Top 50 will also be operating in a significantly more challenging operating environment, say analysts. Staying in the game at all may even become difficult for some asset-strapped carriers.
“World ocean container trade activity is increasingly reflecting the slowdown in economies other than the already-weak U.S. economy,” notes Paul Bingham, an economist with Global Insight. “The deterioration in the economies of some of the developed countries in Europe and Asia has accelerated, causing us to revise downwards our near-term forecasts of ocean container trade. The downward revision is from already-weak trade volumes forecasted for 2008 and 2009.”
According to Bingham, U.S. containerized imports will decline 8.2 percent in 2008, which is slightly more pessimistic than our previous projection of a 7.1 percent decline. “This revision is based mostly on a deteriorating outlook for imports through the Gulf ports,” says Bingham. “On the positive side,” he adds, “we have increased the 2008 U.S. export growth forecast from 17.7 percent to 22.6 percent. Major U.S. export destinations for which we revised our forecasts significantly upwards include Brazil, India, Indonesia, Malaysia, and South Korea. The year-over-year export growth was even more substantial in the first half of this year at 26.6 percent.”
Bingham expects, however, that export expansion will slow in the second half of this year due to the worsening production prospects in Europe and the appreciation of the U.S. dollar. And don’t expect to see too much upward movement in our “Top 50” next year, says Bingham. With new container vessel deliveries coming at a time when both the Transpacific and the Far East-to-Europe trades are weak, he believes the pressures on freight rates will be downwards if the steamship lines cannot continue to manage their capacity.
“We have already seen declining spot rates from the Far East, and the normal peak season surcharges are not being brought in due to weak volumes,” he says. “The ability to add to vessel strings is substantially down from last year, when vessels were shifted from the transpacific to the Far East Europe trade lane, which has now resulted in overcapacity and utilization that has dropped well below the 90 percent level.”
By way of proof, he notes that at least two steamship lines have shifted capacity into temporary by skipping a voyage all together this year. “This is equivalent to a 63-day lay-up,” adds Bingham.
| Total | Owned | Chartered | Orderbook | ||||||||
| Rank | Operator | TEU | Ships | TEU | Ships | TEU | Ships | % Chart | TEU | Ships | % existing |
| All information above is given as guidance only and in good faith without guarantee © Alphaliner 1999-2008 | |||||||||||
| 1 | APM-Maersk | 2,026,675 | 540 | 1,089,220 | 200 | 937,455 | 340 | 46.3% | 455,742 | 92 | 22.5% |
| 2 | Mediterranean Shg Co | 1,363,380 | 414 | 755,170 | 225 | 608,210 | 189 | 44.6% | 571,530 | 48 | 41.9% |
| 3 | CMA CGM Group | 966,217 | 394 | 295,025 | 93 | 671,192 | 301 | 69.5% | 664,894 | 79 | 68.8% |
| 4 | Evergreen Line | 636,459 | 183 | 363,425 | 102 | 273,034 | 81 | 42.9% | 4,298 | 1 | 0.7% |
| 5 | Hapag-Lloyd | 499,290 | 136 | 265,331 | 62 | 233,959 | 74 | 46.9% | 122,500 | 14 | 24.5% |
| 6 | COSCO Container L. | 484,833 | 156 | 273,847 | 100 | 210,986 | 56 | 43.5% | 504,880 | 70 | 104.1% |
| 7 | APL | 463,073 | 131 | 139,714 | 38 | 323,359 | 93 | 69.8% | 192,380 | 26 | 41.5% |
| 8 | CSCL | 433,684 | 137 | 258,236 | 85 | 175,448 | 52 | 40.5% | 258,081 | 38 | 59.5% |
| 9 | NYK | 420,116 | 122 | 273,042 | 51 | 147,074 | 71 | 35.0% | 194,476 | 35 | 46.3% |
| 10 | Hanjin/Senator | 376,742 | 91 | 139,646 | 27 | 237,096 | 64 | 62.9% | 301,786 | 37 | 80.1% |
| 11 | MOL | 376,375 | 114 | 172,934 | 38 | 203,441 | 76 | 54.1% | 217,967 | 39 | 57.9% |
| 12 | OOCL | 357,934 | 84 | 209,493 | 37 | 148,441 | 47 | 41.5% | 129,632 | 20 | 36.2% |
| 13 | K Line | 305,069 | 92 | 169,306 | 34 | 135,763 | 58 | 44.5% | 183,370 | 37 | 60.1% |
| 14 | Zim | 298,618 | 116 | 126,289 | 38 | 172,329 | 78 | 57.7% | 294,997 | 42 | 98.8% |
| 15 | Yang Ming Line | 294,499 | 84 | 189,297 | 53 | 105,202 | 31 | 35.7% | 195,878 | 32 | 66.5% |
| 16 | Hamburg Süd Group | 288,694 | 116 | 124,049 | 39 | 164,645 | 77 | 57.0% | 177,154 | 34 | 61.4% |
| 17 | CSAV Group | 279,942 | 91 | 21,208 | 4 | 258,734 | 87 | 92.4% | 160,719 | 22 | 57.4% |
| 18 | Hyundai M.M. | 251,877 | 59 | 83,657 | 17 | 168,220 | 42 | 66.8% | 132,810 | 14 | 52.7% |
| 19 | PIL (Pacific Int. Line) | 190,420 | 114 | 112,007 | 73 | 78,413 | 41 | 41.2% | 81,135 | 23 | 42.6% |
| 20 | Wan Hai Lines | 144,032 | 83 | 101,237 | 52 | 42,795 | 31 | 29.7% | 52,402 | 19 | 36.4% |
| 21 | UASC | 136,468 | 44 | 103,608 | 30 | 32,860 | 14 | 24.1% | 172,734 | 20 | 126.6% |
| 22 | MISC Berhad | 96,221 | 30 | 40,151 | 15 | 56,070 | 15 | 58.3% | |||
| 23 | IRIS Lines | 95,514 | 63 | 77,703 | 47 | 17,811 | 16 | 18.6% | 65,013 | 32 | 68.1% |
| 24 | RCL (Regional Container Line) | 57,836 | 44 | 38,782 | 32 | 19,054 | 12 | 32.9% | 5,464 | 2 | 9.4% |
| 25 | Grimaldi (Napoli) | 57,440 | 61 | 46,107 | 42 | 11,333 | 19 | 19.7% | 6,124 | 11 | 10.7% |
| 26 | Sea Consortium | 56,411 | 64 | 56,411 | 64 | 100.0% | |||||
| 27 | CCNI | 49,486 | 22 | 3,630 | 1 | 45,856 | 21 | 92.7% | |||
| 28 | Maruba + CLAN | 45,008 | 19 | 45,008 | 19 | 100.0% | 3,534 | 1 | 7.9% | ||
| 29 | TS Lines | 38,758 | 23 | 4,734 | 3 | 34,024 | 20 | 87.8% | 2,702 | 1 | 7.0% |
| 30 | Swire Shipping | 38,224 | 36 | 19,094 | 17 | 19,130 | 19 | 50.0% | 13,800 | 6 | 36.1% |
| 31 | KMTC | 36,316 | 29 | 16,382 | 17 | 19,934 | 12 | 54.9% | |||
| 32 | Seaboard Marine | 34,522 | 42 | 7,690 | 11 | 26,832 | 31 | 77.7% | |||
| 33 | Schöller Group | 33,763 | 26 | 1,034 | 1 | 32,729 | 25 | 96.9% | 20,290 | 10 | 60.1% |
| 34 | Horizon Lines | 32,683 | 16 | 18,557 | 11 | 14,126 | 5 | 43.2% | |||
| 35 | Matson | 31,433 | 17 | 30,776 | 16 | 657 | 1 | 2.1% | |||
| 36 | Samudera | 30,463 | 34 | 5,146 | 11 | 25,317 | 23 | 83.1% | 3,852 | 3 | 12.6% |
| 37 | East Med Express (EMES) | 29,645 | 31 | 12,090 | 12 | 17,555 | 19 | 59.2% | |||
| 38 | SITC | 28,872 | 37 | 9,908 | 13 | 18,964 | 24 | 65.7% | 2,721 | 3 | 9.4% |
| 39 | UniFeeder | 28,460 | 37 | 28,460 | 37 | 100.0% | |||||
| 40 | Nile Dutch Shg | 27,367 | 21 | 4,117 | 5 | 23,250 | 16 | 85.0% | |||
| 41 | Emirates Shipping Line | 26,533 | 10 | 26,533 | 10 | 100.0% | |||||
| 42 | OEL/Shreyas | 22,816 | 21 | 10,973 | 12 | 11,843 | 9 | 51.9% | 3,464 | 2 | 15.2% |
| 43 | Linea Messina | 22,327 | 18 | 21,435 | 16 | 892 | 2 | 4.0% | |||
| 44 | United Feeder Services | 22,274 | 31 | 22,274 | 31 | 100.0% | |||||
| 45 | Rickmers Linie | 22,032 | 16 | 16,992 | 9 | 5,040 | 7 | 22.9% | 19,312 | 18 | 87.7% |
| 46 | Sinokor | 21,342 | 26 | 12,813 | 15 | 8,529 | 11 | 40.0% | |||
| 47 | Heung-A Shipping | 20,885 | 26 | 6,808 | 12 | 14,077 | 14 | 67.4% | |||
| 48 | Delphis NV/Team Lines | 20,679 | 31 | 20,679 | 31 | 100.0% | 28,668 | 10 | 138.6% | ||
| 49 | SYMS | 19,861 | 18 | 19,861 | 18 | 100.0% | |||||
| 50 | Chipolbrok | 19,762 | 18 | 19,762 | 18 | 11,100 | 6 | 56.2% | |||
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