Consolidation For Containership Growth



Neptune Orient Lines, the Singapore-based shipping company is up for sale for $2bn.  Maersk Line has proposals to buy it.  Maersk Line, the world’s largest container shipping group told that the industry is hit by weak global trade, particularly imports into Europe. This trade situation could be improved by mergers between carriers.  Consolidation benefits the industry, the carriers and also the customers.

Maersk’s last big deal was in 2005 when it bought P&O Nedlloyd. Container shipping had been affected  since the 2008 crisis as global trade growth has plunged.  Maersk last month issued a profit warning and said it would cut thousands of jobs as demand for its core Asia to Europe routes fell, pushing prices to a record low.

Maersk is expecting just 1-2 per cent, instead of the 10% pre-crisis growth, Mr Skou said. NOL revealed last weekend that Maersk and France’s CMA CGM, the world’s number one and three container shipping groups, are buying the struggling company from Temasek, its majority owner.

Maersk has found out a vessel-sharing agreement with Mediterranean Shipping Company, the number two player, that has helped cut costs and improve the number of sailings and routes.  Consolidated carriers will be better able to invest in digitalisation, for instance.  Mr Skou also pointed to benefits from acquisitions in procurement; being able to use larger feeder vessels for the main routes; lower administration costs; and more resources for design and management.

Maersk has a 15 per cent share of the global container industry while APL, the brand under which NOL sails, has 2.6 per cent.  APL is also part of one of the four alliances that dominate global shipping, the so-called G6 alliance alongside Germany’s Hapag-Lloyd and four other carriers.

Source: Financial Times