LONDON — The top three ocean carriers — Maersk Line, Mediterranean Shipping Co. and CMA CGM — have boosted their share of global container capacity to 38 percent from 26 percent over the past decade and are continuing to pull ahead of their rivals, according to Drewry Maritime Research.
The increase — and that of the world fleet — has been largely driven by organic growth from new ship deliveries coupled with mergers and acquisition activity including Maersk’s takeover of P&O Nedlloyd in late 2005 and the recent fusion of Hapag-Lloyd and CSAV, the London-based analyst said.
The top three carriers have posted an average compound annual growth rate of 12.5 percent since 2005, compared with 9.6 percent for the top 20 lines and 8.7 percent for the total world fleet.
The concentration of power among the leading carriers has been “a seemingly unstoppable trend” over the past decade apart from 2009 when the global financial crisis forced major lines to off-hire and lay-up [mainly chartered] vessels.
The top three plus fourth ranked Hapag-Lloyd and fifth ranked Evergreen – have seen their market share grow to 48 percent from 37 percent in 2005.
“The concentration of power at the top isn’t at a critical point just yet, but shippers would have some justification for describing the market as an oligopoly if the top five carriers reached the point where they controlled say 90 percent of the global capacity,” Drewry said in its latest Container Insight Weekly.
With an aggregate fleet of just under 17 million 20-foot-equivalent units, the top 20 carriers now control 87 percent of the world’s total container capacity, up from 79 percent in 2005. The top 20 lines have added a “staggering” 10.2 million TEUs over the past ten years.
In the past, the medium-sized carriers have grown their fleets sufficiently to prevent being taken over by the larger operators. But now the gap is getting much wider due to the top three carriers’ massive orderbooks.
In a bid to survive, medium sized lines are following the lead of the top players by ordering mega-ships. “In doing so they make themselves a tougher catch for the big lines as the new assets will inflate their purchase prices and at the same time make it harder to keep any merged entity beneath acceptable competition thresholds,” Drewry said.
The purchase of mega-ships by mid-sized carriers is a defensive move to fight off any attack by the big players “but the sting in the tail is that it guarantees years of overcapacity that will depress freight rates and profitability for all.”
With rates at historical lows and bunker costs steadily creeping up even a company of Maersk’s size will feel the pinch, according to Drewry.
Recent comments by Maersk Group CEO Nils Andersen questioning the logic of continued investments by small and medium-sized carriers with 3-5 percent market shares that have been unprofitable for the past seven years “perhaps betrays a company that knows it is in for a bumpy ride in the short-term at least.”
“The removal of a few pesky competitors would certainly help to lift freight rates off the floor.”
But a carrier with 3 to 5 percent capacity applies more or less to any top 20 line other than Maersk, MSC and CMA CGM, Drewry notes.
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