Smaller Firms Likely to Be Forced Out from Boxship Market

Small and midsize container carriers are likely to be squeezed out of the business by shipping majors, according to A.P. Møller-Mærsk A/S Chief Executive Nils Andersen.

“I can’t speak for other companies, but small and midsize carriers-controlling a 3% to 5% market share–with very few exceptions–have been unprofitable for the last seven years,” Andersen told The Wall Street Journal.

“After such a long period of not being profitable, it defies logic to continue to invest in the business.”

The container shipping market, plagued by overcapacity for some time, is yet to receive more newbuilding capacity further fueling the capacity surplus.

From June onwards there will be a minimum of 100,000 teu per month joining the world containership fleet with July seeing twice that amount, data from UK-based shipping consultancy Drewry shows.

Overcapacity has triggered a dip in freight rates, particularly along the Asia-Europe trades. This, coupled with forming of shipping alliances among key shipping companies that are dominating global trades, leave little space for smaller counterparts.

With shipping majors taming up to share costs and ordering giant ships that smaller companies cannot afford the latter seem to be on the losing end of the equation.

What is more, as the market is heading toward a lulled period of marginalized growth, it is highly unlikely that there will be an easy way to make a profit going forward for a small or midsize carrier, said Andersen.

World Maritime News Staff