Lines in no rush to form consolidations
December 14, 2011
There are no signs of capacity reduction happening on the Far East-North Europe trade lane next year.
According to analyst Alphaliner, the recently announced MSC-CMA CGM partnership triggered some hasty conclusions that it would herald a new wave of consolidation in the industry in 2012.
However, “such a conclusion is premature,” it said. “There is no evidence that any major consolidation moves will occur within the next 12 months.”
The analyst said that within a tight lending environment and weak capital markets, carriers would face significant hurdles to funding major acquisitions.
“While carriers could well seek to expand operational alliances through partnerships with other lines, such moves do not result in a reduction of competition.”
The MSC-CMA CGM alliance is a slot exchange and vessel-sharing agreement, which Alphaliner described as “neither unique nor groundbreaking”.
MSC and CMA CGM have co-operated episodically on the transatlantic trade during the last decade, and both have been involved in a transpacific vessel-sharing agreement since 2004.
Such partnerships are common industry practice, and have been prevalent since the early consortia arrangement established in the late 1960s/early 1970s in the transatlantic, Europe-Australia and Europe-Far East trades. Some of these early consortia were much tighter partnerships that shared revenue and costs, added the analyst.
“The MSC-CMA CGM alliance on the Far East-North Europe trade will not result in any reduction in overall capacity for the two carriers,” it said.
Meanwhile, Maersk has indicated that it is prepared to fill the void caused by the withdrawal of CMA CGM’s vessels on the joint AE-8/FAL 5 loop, while the New World Alliance is to upgrade two of its loops with larger vessels.
Alphaliner said it expected total weekly capacity on the Far East-North Europe trade to rise by 5-10% next year, depending on demand.
“An oversupply situation can only by avoided by mothballing a significant number of large ships,” added the analyst.
Courtesy of IFW
