The latest Container Insight report released by Drewry Shipping Consultants states that they do not foresee any imminent large-scale carrier merger and acquisitions and that eventually, membership of the top 20 will shift to take in more of the small, regional carriers.
According to Drewry, the top 20 carriers have added 10.2 million TEU of ship capacity since the summer of 2005 – when the collective share was 79%.
This sharp increase has been largely driven by organic growth from new ship deliveries, although there has been some merger and acquisition activity in the last ten years, including three larger inter-top 20 cases.
In late 2005 when Maersk bought P&O Nedlloyd and Hapag-Lloyd purchased CP Ships, and this year’s merger of CSAV within Hapag-Lloyd.
In a recent interview with the Wall Street Journal Nils Smedegaard Andersen, Maersk Group CEO, gave a warning to smaller rivals to think about exiting the container shipping market: “I can’t speak for other companies, but small and mid-size carriers controlling a 3% to 5% market share – with very few exceptions – have been unprofitable for the last seven years. After such a long period of not being profitable, it defies logic to continue to invest in the business.”
Drewry believes that Maersk’s elevated status and market leading profitability is no fluke and the company has set the template that the rest of the industry has tried to follow.
The make-up of the top 20 carriers has barely changed in the last 10 years. The exits of P&O Nedlloyd and CP Ships at the end of 2005 gave entry to the club to PIL and Wan Hai – carriers with limited geographical scope.
Wan Hai was dislodged by the expansionist Middle East-based carrier UASC in 2009 only to return this year after the exit of CSAV.
Were there to be any more inter-top 20 consolidation, such as that rumoured for APL and OOCL, even smaller carriers would join the club by default. The next lines on the rank just outside the top 20 are intra-Asia carriers X-Press Feeders and KMTC Lines who only have shares of 0.6% and 0.5%, respectively.