We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » Container industry chaos likely to continue, observers say
newsworthy

Container industry chaos likely to continue, observers say

November 21, 2016
Toby Gooley
No Comments

The container shipping industry finds itself once again in a period of turmoil and uncertainty, with no end in sight.

Hanjin Shipping Co. Ltd.'s bankruptcy served to exacerbate an already unsteady situation, and the recently announced joint venture among Japan's three largest container carriers—NYK Line, Mitsui O.S.K. Line, and K Line—is widely viewed as a harbinger of more consolidation to come.

Speakers on a panel at the Coalition of New England Companies for Trade (CONECT) Northeast Cargo Symposium, held in Providence, R.I., earlier this month, reeled off a litany of challenges facing the container shipping industry. John Reeve, a longtime maritime industry consultant, cited forecasts that carriers could lose as much as $10 billion in 2016, noting that container lines can no longer grow their way out of their troubles. Fast-growing economies like China and Brazil that boosted demand for shipping services have dramatically slowed, and with e-commerce speeding the order-to-delivery cycle, "the days of converting cargoes from air to ocean are over," he said. Relatively new container ships are being scrapped, and although Reeve expects container rates to gradually increase, any rise will be very limited due to continuing overcapacity, he said.

The year has seen three major mergers: CMA-CGM and Neptune Orient Line, COSCO and China Shipping, and Hapag-Lloyd and United Arab Shipping Co. With virtually all of the major container lines in the red, further concentration in the industry is "quite possible," Reeve said, but much will depend on the motivation and attitudes of the government players that exert influence over many of the world's shipping lines. He also suggested that Maersk is "probably in the market" for a merger.

At least one carrier, Hyundai Merchant Marine (HMM), has demonstrated that it's possible to come back from the brink. An announcement by its parent, the giant Korean industrial conglomerate Hyundai Group, that the carrier was in danger of collapse left competitors, including Hanjin, anticipating a bankruptcy. But a swift restructuring between March and June changed everything, said Michael Vaccaro, vice president of Hyundai Merchant Marine America and Hyundai America Shipping Agency.

After spinning off from its parent, HMM generated more than US$1.3 billion in working capital by selling off such assets as its bulk business and Hyundai Securities division. It also cut loose some of its charters and renegotiated debt with banks and creditors, and next year will join an alliance with Maersk and Mediterranean Shipping Co. (MSC). Hyundai still needs to rationalize its fleet further, but it now has about four to five years of "runway" to rebuild, Vaccaro said.

Vaccaro predicted there will be further merger and acquisition activity, noting some forecasts that in five to 10 years the number of container carriers will be half what it is today. "Every container carrier now is subject to speculation about acquiring or being acquired by another carrier," he said.

Intermediaries have benefitted from the liner industry's problems as shippers seek to spread their risk, Reeve said. That trend was confirmed by fellow panelist Trevor LaChapelle, vice president, global transportation, for BJ's Wholesale Club Inc. BJ's has "embraced the idea of working with" ocean consolidators to gain more flexibility, assure the availability of containers, and get help with "things we hadn't foreseen and had not negotiated into our contracts" with ocean carriers, he said.

Transportation Maritime & Ocean
KEYWORDS BJ's Wholesale Club Coalition of New England Companies for Trade (CONECT) Hyundai Merchant Marine
  • Related Articles

    Mexican approach to NAFTA renegotiation offers lessons for U.S., observers say

    Container shipping sector stung by coronavirus, but recovery is likely

    Industry tracks dramatic rise in container ship fires

Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

Recent Articles by Toby Gooley

Better together

Rightsizing your forklift fleet in uncertain times

National Forklift Safety Day 2020 focuses on safety best practices

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • IBM survey says digitalization trends will sweep trucking industry by 2030

  • Gartner survey signals increased investment in resilience over the next two years

  • Truck driver hiring pool tightens to lowest point in three years, ACT says

  • What Level of Automation is Right for Your Warehouse?

  • Growing up … and up and up: interview with Sam Bertram

Now Playing on DCV-TV

D92f0dd1 a98c 434a 9e17 30b63ee72c90

Automated Pack-out and Print-Apply System for thredUP

DCV-TV 4: Viewer Contributed
SilMan Industries designed and implemented a mixed polybag-carton system, including automated print and apply, in a new regional Fulfillment Center for thredUP, one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes, and accessories.The Situation Secondhand clothing and online...

FEATURED WHITE PAPERS

  • Using innovation to manage peak seasonal demand

  • Time to rethink your lift truck power

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing