Analysts anticipate further ocean carrier consolidation

The recent announcement on Japan’s three major ocean carriers – MOL, NYK Line and “K” Line – merging container operations has left the industry wondering if more consolidation is to come.    Earlier this week, Japan’s three major ocean carriers – MOL, NYK Line and “K” Line – jointly announced their plans to merge their container operations in mid-2017.
   The combined companies would have a total operating fleet capacity of 1.46 million TEUs, making it the sixth largest carrier in the world, according to data from ocean carrier schedule and capacity database BlueWater Reporting.
   All three of Japan’s “Big 3” carriers are due to become part of the THE Alliance next year. THE Alliance will also include Yang Ming of Taiwan and Germany’s Hapag-Lloyd, which UASC will be merging into.
   Dirk Visser, senior analyst at the Netherlands-based consulting firm Dynamar, told American Shipper the joint venture between the three Japanese carriers was “altogether a necessary but defensive move.”
   “Unless regulators would be living under a stone, they will (should) agree upon this particular joint venture, typically one between (largely) culturally compatible parties,” Visser said.
   Looking ahead, Visser speculated alliances could shift even further. He believes Hyundai Merchant Marine (HMM) will end up acquiring the transpacific assets of Hanjin and join THE Alliance, despite HMM signing a memorandum of understanding with the 2M Alliance members – Maersk Line and MSC – earlier this year.
   In regards to consolidation between the Taiwanese carriers, Visser said, “I don’t think that under the present circumstances, the 33.3 percent government share in Yang Ming would represent a problem, but yet, to my feeling, Evergreen/Wan Hai would be closer to each other than Evergreen to Yang Ming.”
   Visser also said its worth keeping an eye on Hamburg Süd, especially in the wake of the forthcoming UASC merger into Hapag-Lloyd. “Since a while, Hamburg Süd and UASC are rendering each other access to the East-West and North-South trades, respectively, and joining Hapag -at last- would be the only means for Hamburg Süd to keep this,” he said.
   Meanwhile, others say that Hapag-Lloyd’s acquisition of Chile’s CSAV has made such a merger unnecessary and that a merger between Hapag-Lloyd and Hamburg Süd might raise the hackles of regulators because it would be too dominant in South America. There have also been rumors about Maersk having a possible interest in Hamburg Süd.
   Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation (NRF), also believes consolidation in the container shipping industry will continue.
   “Our hope is that the merger will help the overall container industry become more cost effective and efficient,” Gold said. “It is too early to judge what kind of an impact this will have on NRF members or the rest of the industry, however, we believe it will be positive and hopefully improve the health of the overall industry. It is critical that the carriers communicate throughout this merger process with cargo owners so that there is full visibility into how the new entity will operate beginning in 2018.”