The opportunities for further mergers and acquisitions among Top 20 carriers are receding with each new deal, but there is still a high likelihood that a second wave involving medium-sized carriers will follow soon, according to shipping consultancy Drewry.
Carrier consolidation is moving apace with the merger of Japanese carriers NYK, MOL and K Line, which have announced the name of their merged containership entity – Ocean Network Express (ONE), scheduled to start operations on April 1, 2018.
When ONE becomes operational it will be the world’s sixth largest carrier when measured by containership fleet with close to 1.4 million TEU, giving it a market share of approximately 7% based on today’s fleet.
The creation of ONE is in keeping with the rising trend of consolidation in the container industry, following on from recent M&A deals involving CMA CGM and APL, Cosco and CSCL, Maersk Line and Hamburg Süd, and Hapag-Lloyd with UASC.
As things stand in terms of active and ordered ships, by 2021 when all newbuilds in the system are due to have been delivered, the top five carriers will control a little under 60% of the world’s containership fleet. Back in 2005 the same bracket of carriers held around 37%, according to Drewry.
Come 2021 the top 10 lines will control 80%, compared to 55% in 2005, while the three leading carriers, namely Maersk Line, MSC and CMA CGM, will take about 42%, against 26% in 2005.
With fewer carriers, that in time will become financially stronger, the pendulum is swinging back towards those that can stick it out.
“Inevitably, as the gap between the leading seven carriers and everyone else beneath gets wider speculation will mount about whether the smaller players can keep up and remain cost-competitive,” Drewry said.