It’s a dog-eat-dog world out there, ocean liner analysts will tell you, and today’s pack leader may just be another kennel cur if the greatest care is not taken to ward off flanking predators. “While it’s true that there is more liner capacity being introduced in all trade lanes, it does not mean it will exceed shipper demand,” says Steven Fletcher, commercial director for AXS Marine, and an ocean cargo analyst firm based in Paris. “That, too, is growing at a fast pace.”

Similar to today’s stock market, there’s volatility to spare in the topsy-turvy world of ocean shipping. But as former Federal Reserve chairman Alan Greenspan was fond of saying, “exuberance can only take one so far.” Indeed, the problem with so many forecasting tools and data crunchers being pitched to shippers today, contends Fletcher, is that they strongly suggest leverage will shift away from the provider. In a word, they may be a bit too frothy.

“Shippers often equate more capacity with lower rates because they are still looking at a supply/demand curve,” says Fletcher. “What shippers really should be considering is whether the carrier will provide add-on logistical services that represent an 'all-in’ competitive price point.”

And it appears that the current Top 10 ocean carrier leaders are doing just that, competing on price but also delivering on value-added service to give them the dominate market share position.

The Top 10 carriers had a combined market share of 49.3 percent in January 2000—it now stands at an impressive 60 percent. The Top 10 fleets have also grown from 2.54 million TEU to 6.28 million TEU over the past six years and their combined market share has thus risen by 21.7 percent. At the other end of the scale, the fleets that ranked 51 to 100 have stagnated at just below 400,000 TEU, with a resulting loss of almost 52 percent in market share—from 7.7 percent in 2000 to 3.7 percent in 2007.

Lest shippers jump to any immediate conclusions, however, consider the observations made by Naresh Hingorani, an associate partner in IBM Business Consulting Services: “Based on our perspective of how industry trends are likely to play out over the next ten years, we expect the market to be freer and more open, while the industry becomes more concentrated and more focused on customer relationships,” he says.

According to Hingorani, this will require a shift in mindset. “Market and customer pressures will drive changes in the way these lines currently do business,” he says. “Customers are increasingly demanding greater reliability of container shipments at lower total cost and changes in public policy are likely to require plans for increased security throughout the industry.”

Meanwhile, he notes, infrastructure constraints and threats from new, more agile entrants will challenge the way industry players currently approach both asset optimization and customer relationships.

Researchers at AXS-Alphaliner also suggest that the top dogs can not remain complacent in their current market dominance. While today’s global market share of the three world leading lines comprises Maersk Line, MSC and CMA CGM, other liners were sharing similar positions just a few years ago. Economists remind us that TEU capacity is a variable shaped by rapid evolutionary change. Therefore, significant attention is paid to so-called “second-tier” carriers who may be moving up the food chain.

In comparing these 2007 numbers to those of just six years ago, analysts observe that the three leading lines at the time, Maersk Sealand, Evergreen, and P&O Nedlloyd, had a combined market share of 23.7 percent. By matching the 2007 figures to those six years earlier, one can see that the same three leading lines had roughly the same combined market share then.

But now the story may be different. Gross percentage is not a reflection of equal contributions, insist AXS analysts. The Maersk Line share, which stood at 18.2 percent of January 1, 2006, has dipped to 16.8 percent on January 1, 2007, reflecting the difficulties the company experienced in digesting P&O Nedlloyd. At the same time, both MSC and CMA CGM have strongly strengthened their positions. MSC has increased its share from 8.6 percent to 9.5 percent, while CMA CGM logged an increase from 5.6 percent to 6.5 percent.

“MSC and CMA CGM are ready to continue boosting their positions as they are taking the ships that other liners are discharging—or subletting—in these uncertain times,” states the AXS report. “It looks like the size and coverage extent of these two carriers give them more confidence in the future than smaller carriers, and they are probably in a better position to sustain lower rates, thanks in part to economies of scale and through distinct commercial flair. It will allow them to drain cargo from smaller competitors and to continue growing faster than the rest.”

Some carriers with a strong regional bias are also doing well; although for them, the concept of global market share is of low significance. IRIS Lines, Hamburg-Süd Group, and PIL have gained significant market shares in global terms—which also means that their regional market share has grown still stronger.

Japanese lines NYK, MOL, and K Line have managed to maintain more or less their shares, and are no longer as expansive as they used to be during the previous decades, although K Line displayed more dynamism than its two fellow counterparts.

“Those who win market share get it, of course, at the expense of rivals,” notes an AXS analyst.

For example, the Evergreen Group saw its market share diminished by 15 percent, down from 6.2 percent to 5.2 percent. Evergreen was ranked in second position in 2000 with a fleet of 318,000 TEU. It has since been relegated to the fourth slot despite a growth to 547,000 TEU.

COSCO Container Lines has seen its share decrease by nine points during the period 2000-2005 but is has recovered some of the loss since mid-2005, an interesting trend as it has been listed on the HKSE in June 2005.

Korean carriers Hanjin Shipping (including Senator Linie) and Hyundai Merchant Marine suffered from the post-1997 financial crisis, note analysts. They were at the time the shipping divisions of heavily indebted chaebols, which had to slash expenses.

The result is that new building programs have been minimal. They are at least still there, which is not the case of independent compatriot Cho Yang Line, which disappeared in 2001. It was then ranked at 25 with a 0.8 percent market share.

A few regional players have also lost their grip. UASC and MISC have seen erosion respectively of 43 percent and 32 percent in relative importance. UASC did not invest, and it waited until March of 2005 to launch a construction program for eight ships of 6,800 TEU planned for delivery in 2008. MISC has put the emphasis on energy transportation, although it has reviewed its liner shipping policy in 2005, with a significant rebound in 2006.

Among smaller carriers, Costa Container Lines built-up a consistent market share on American trades, boosting its overall presence from insignificant to 0.34 percent while the China Navigation Co. (Swire Group) strengthened its presence on the South Pacific markets.

In China, regional carriers SYMS and SITC have made their move. SYMS has even entered the Top 30 in December 2005 with its fleet passing the 32,000 TEU mark and reaching 36,700 TEU on January 1, 2007, despite having sublet ships and cancelled charters throughout the year. SYMS launched its first international services in 1999.

Given the vicissitudes of today’s trade climate, shippers may be right to regard all players in the top 30 as reliable transport partners. The reason is simple: between January 2000 and January 2007, the TEU capacity deployed on all liner trades has more than doubled, rising from 5,150,000 TEU to 10,467,000 TEU.

“That means that in order to simply keep their market shares during that period, carriers had to increase their fleet capacities by 103 percent,” said AXS analysts. “Those which failed to invest or charter enough to keep the pace have lost market share.”

In examining the performances of a selection of carriers among the top 30 lines, shippers may note that it is based on the ratio between market shares over the past six years. For example, CSCL market share rose from 1.67 percent to 3.82 percent, (i.e. an increase of 127.8 percent).

“As clearly shown in the graph, the four rising stars of this decade so far are CMA CGM, CSCL, MSC, and Hapag-Lloyd,” note AXS analysts.

IBM Business Consulting Services, which also relies on AXS data, concurs, but with some caveats: “In the past, a focus on asset optimization has been integral to success,” adds Hingorani. “In the future, carriers that give that same attention to managing product reliability more effectively will reap the rewards.