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
The E-commerce Logistics Revolution
The technology and processes that are revolutionizing logistics and supply chain operations are helping today’s organizations keep pace with digital commerce.
Download Today!
From the January 2018 Logistics Management Magazine Issue
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and the most successful shippers will be those that are able to mitigate their impact on profitability. And, the right technology will play an increasingly vital role in driving efficiencies across the global logistics network.
The Future of Retail Distribution
Navigating the Reverse Supply Chain for Connected Devices
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
IAM, IoT and the Connected Supply Chain
There are three primary models of Identity and Access Management (IAM) technology that CTOs, CSOs, and Supply Chain executives are using to enhance their trading partner communities. While each leverages IAM and the IoT as core components only an “Outside-in” approach truly connects people, systems and things reliably and securely across the supply chain.
Register Today!
EDITORS' PICKS
State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...

Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...