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 Patrick Burnson, Executive Editor
November 08, 2011 - LM Editorial

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

image
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 .(JavaScript must be enabled to view this email address).


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!

Recent Entries

When the United States House of Representatives last week voted extend current law and authorizes surface transportation programs through the end of July by a steep margin, it was widely expected that the United States Senate and follow their lead. That is exactly what happened on Friday, May 22, with the measures headed to President Obama to be signed into law.

For the month of April, Cass and Avondale found that truckload rates in April, which measures truckload linehaul rates paid during the month, were up 3.8 percent annually, while intermodal dropped 1.9 percent annually during the same period.

Following the Pacific Maritime Association (PMA) signing off on ratifying a new five-year contract with the International Longshore & Warehouse Union (ILWU) on May 20, the ILWU followed suite on May 22, saying that 82 percent of its longshore worker members voted to ratify the tentative contract agreement between the parties that was reached on February 22.

Straying from its typical seasonal trajectory, United States-bound waterborne shipments dipped from March to April, according to data recently issued by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

One theme tied together all of the presentations, regardless of the topic: The importance of data.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA