Drewry: Potential exists for more mergers, acquisitions in container market

Carriers are heading toward a brighter future, but there are a number of temporary factors creating a bump in the road to recovery, the London-based shipping research and consulting firm said.    With nearly 400 different vessel operators plying their trade worldwide, there’s plenty of competition and potential for more merger and acquisition activity, according to a new analysis by London-based industry analyst Drewry Shipping Consultancy.
   “The collapse of freight rates during the second half of last year, far out of line with the underlying supply and demand fundamentals, suggests that carriers have not yet rid themselves of certain self-sabotaging traits and that talk of a new golden age for carriers was perhaps exaggerated,” the consultancy said in a report issued Monday.
   Despite the recent developments, however, in its latest container forecast report, Drewry maintains that carriers are heading toward a brighter future, while also acknowledging there are a number of temporary factors creating a bump in the road to recovery.
   One area that might have been expected to have provided a more immediate benefit, Drewry said, was the significant consolidation occurring in the market. But the fact that mergers and acquisitions haven’t materially changed anything so far is not that surprising on reflection, according to the analysis.
   “The latest consolidation wave has barely become operational, with most transactions either just concluded or still pending,” according to the container forecast report. “Moreover, even after all of the latest deals are finalized, they alone do not have sufficient weight to move the industry all the way to being a non-collusive oligopoly, which we previously outlined as being necessary to herald a new era of ‘liner paradise’.
   “If anything,” the report continues, “we perhaps overlooked the risk that the merger activity would make some predators more aggressive with their pricing, to minimize customer attrition.”