Following a period of deep consolidation that resulted in just three main alliances – namely THE Alliance, Ocean Alliance, and 2M – the boxship market has reached an oligopoly status, especially on the major trade lanes, according to Lars Jensen, ceo and partner of SeaIntelligence Consulting.
“We have seen, over the last few years, the emergence of oligopoly and carriers are finally figuring out how consolidation can stabilise the market,” Jensen told delegates at the Shipping 2030 Asia conference in Singapore, organised by KNect365 Maritime.
“The volatility of freight rates has declined but that does not necessarily mean higher rates – just more stabilised,” he observed.
Jensen added that the market can also expect global demand growth to enter a “new norm” of 2-3%, and container shipping can forget about the multiplier effect linked for each percentage of GDP growth.
Demand growth is expected to be in the range of 1-1.5% this year, following negative growth registered in December 2018, and January-February 2019. Moreover, the demand growth is not evenly distributed, with Europe being a more positive market both for import and export, while North America has been volatile and may experience negative demand growth in the next few years.
“Europe will be the main driver for demand growth this year. The good thing is that the market is now having record low orderbook and the installation of scrubbers is pulling some capacity out of the market,” Jensen said.
“We are looking at 2% capacity growth in 2019 and probably into 2020 as well,” he said.
In addition, carriers have looked into a more structured and systematic approach to blank sailings, contributing to better managing capacity.
And while the sizes of ships are getting bigger, that process has been accompanied by a decline in the number of services as well as the consolidation effect leading to ‘less’ number of shipping lines.
“If we looked back at three to four years ago, carriers were looking at growth via fleet expansion and widening of market share. This has changed. Today, it is about looking at how to manage capacity and the stabilisation of financing,” he said.
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