Rodolphe Saadé, Vice Chairman of CMA CGM has announced he believes none of the largest carriers and container shipping companies will make a profit this year, reported the Wall Street Journal.
Mr Saadé said: “In 2016, most probably, none of the 20 top companies will be profitable, consolidation will continue because small shipping lines will not be able to survive; the small to medium operators will be looking for a big brother to acquire them.”
The estimated combined losses of the top 20 operators for 2016, as predicted by industry experts, sits at the US$10 billion mark; freight rates are expected to drop even further, with the average cost of a container at the moment being half of what is needed to break even.
The merging of larger carriers and shipping companies is commonplace right now, with the THE alliance, the 2M Alliance and the newly announced alliance between Nippon Yusen, Mitsui O.S.K Lines and K-Line, and since the collapse of Hanjin Shipping on August 31, 2016, the largest companies seem to be uniting to protect themselves from also going under.
Despite this bleak outlook, new smaller shipping lines are emerging; for example, a brand new shipping line, Viasea, will begin operations in northern Europe in the week of October 31, 2016.
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