Consolidations in the container shipping sector, as some of the big carriers merged and new alliances were formed among others, has helped to bring some order to the industry's chaos. Former competitors found themselves working in partnership to solve such issues as the growing cargo glut. To ensure that ships are fully loaded, two or three different carrier lines are using a single ship to carry goods. This reduces operating costs, helps shipping lines' bottom line, and creates more efficiency.
CMA CGM’s acquisition of APL, the merger of Cosco and CSCL, Hapag-Lloyd’s merger with UASC and the forthcoming takeover of Hamburg Sud by Maersk has resulted in a widening of the chasm between the big players and their mid-sized peers. According to Drewry, there is a “high likelihood” of a new wave of M&A activity involving medium-size ocean carriers, as the gap widens between them and the largest container lines.
Inevitably, as the gap between the leading seven carriers and everyone else gets wider, speculation will mount about whether the smaller players can keep up and remain cost-competitive. – Drewry
While alliances are forming, freight rates – which had plunged in 2016 – are beginning to bounce back. As well, one of the biggest fears in the industry, overcapacity, is starting to ease. The general consensus of opinion is that carriers will enjoy a much improved second quarter financial performance on the back of significantly higher contract and spot container freight rates.