Ocean carrier attrition in the transpacific persists

When six new shipping lines entered the Transpacific market two years ago, analysts observed that market share could finally be wrested away from established cartel carriers

By ·

When six new shipping lines entered the Transpacific market two years ago, analysts observed that market share could finally be wrested away from established cartel carriers.

That effort seems to have been wasted, however, as only two of the original challengers remain in the trade lane. According the Paris-based consultancy, Alphaliner, Hainan POS and TS Lines comprise the surviving upstarts. With the departure of TCC, CSAV, Horizon Lines and Grand China Shipping, these two are are struggling to maintain their presence and have trimmed
down their joint services.

“Despite these efforts, both still remain under pressure
as losses mount while their relatively small ships put them at a disadvantage,” said Alphaliner’s commercial director, Stephen Fletcher.

The service rationalizations undertaken by POS/TS Lines will leave the new carriers with a market share of less than 1.5 percent. These moves, along with further rationalizations initiated by the established carriers on the transpacific route, have allowed for a stabilization
of spot rates.

The rates to the U.S. West Coast have even shown marginal gains during the past two weeks. Alphaliner estimates that the average load factor on the Transpacific rose to 95 percent in October, due to service withdrawals and sailing omissions
during the Chinese Golden Week holidays. With weaker demand expected in the next two months, further services are to be suspended in November. With these additional capacity reductions, current utilization levels can hopefully be maintained.

“The trimming-down of the new carriers’ services has influenced spot rates due to the higher NVOCC component of the less established lines,” said Fletcher.

“An analysis by Alphaliner of the breakdown between BCO (Beneficial Cargo Owners) and NVOCC (Non Vessel Operating Common Carrier) shares shows that the smaller carriers rely on a much higher share of NVOCC volumes which are more exposed to the spot market.”

The average NVOCC share of the six new carriers stood at 74 percent, compared to an industry average of 38 percent. Of note, the NVOCC share of the FE-US trade has increased from 22 percent in 2004 to 38 percent last year, due partly to the entry of new carriers into the market

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Case Study: LEAN Yields Big Results
Every day, companies across a wide range of industries use LEAN in their supply chains, warehouses and distribution centers, finance departments, and customer service centers, among other areas. LEAN practices improve safety, quality, and productivity by extracting cost and waste from all facets of an operation – from the procurement of raw materials to the shipment of finished goods.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...