Editorial: Shippers should be outspoken about liner shakeout

   Remember a handful of years ago when major global airlines formed numerous alliances, supposedly to benefit travelers? The same was said about the purported outcomes of the various airline mergers in the United States, Europe and Asia. Now tell us, with all honesty, has flying the friendly skies gotten any better in terms of cost and service? We didn’t think so.
   Now the ocean carrier industry has belatedly embarked on its own flurry of mergers and acquisitions the past couple of years, which will mean significant consolidations of container capacity and rejiggering of global services. 
   Since December, CMA CGM has acquired APL, COSCO and China Shipping have merged, and Hapag-Lloyd and United Arab Shipping Co. will potentially combine. There have also been persistent, but conflicting reports about a possible merger between Hanjin and Hyundai Merchant Marine. All these carriers are substantial operators in their own right, and these mergers would realign which are the biggest carriers among the top 20 today.
   Then there’s the cascading effect that these proposed carrier combinations are having on the alliance structures. Come next April, the Ocean3, CKYHE and G6 alliance members will be reshuffled into the uninspiringly named OCEAN Alliance and THE Alliance.
   Like their airline brethren before them, the liner industry says the mergers and new alliances will give carriers the ability to reach more customers, increase their services across more routes and port pairs, and allow them to pool and manage their costly assets more efficiently. Nice for them, but is it good for the shippers?
   Granted, many container carriers are in sad shape and require significant changes in the way they have traditionally done business in order to survive. Yet some of the industry wounds have the appearance of being self-inflicted—we’re talking about ordering mega-size containerships during what has become a prolonged period of slow economic growth and the propensity to accept non-compensatory freight rates from customers on many routes.
   Most shippers and non-vessel-operating common carriers could see this industry shakeup coming, but should rightfully be concerned about what it will mean for them in the long run. 
   The European Shippers’ Council, one of the more outspoken groups on liner carrier consolidation and the realignment of the alliances, has called for the creation of a monitoring system for competition data regarding alliances. “Alliances that were supposed to bring better services for shippers appear to bring more consolidation on the market and lessen the number of ports directly called in services between Asia and the Western Mediterranean,” the Brussels-based group warned.
   American Shipper Publisher and CEO Hayes Howard, meanwhile, said he wonders “if the realignment we are in the midst of will make much difference. Will reforming from four major alliances into three make a difference? I am hoping so, but I’m not holding my breath.”
   American shippers and NVOs will be wise to speak out now and as loudly as possible about their concerns regarding container industry consolidation and changing alliances on the U.S. trades to the Federal Maritime Commission and the carriers themselves. They may not be able to stop what’s happening among the ocean carriers, but they should be a part of the process to effect a more positive industry change for those carriers’ customers. Don’t sit back and then after the fact wish you made your voice heard.