Capacity grows, but shipping market becomes more concentrated

Paul Snell is managing editor at Supply Management
31 October 2015

The average number of shipping companies providing services to ports has fallen by almost a third over the past decade.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), while container-carrying capacity per provider for each country tripled between 2004 and 2015, the average number of companies providing services has fallen by 29 per cent.

“Both trends illustrate two sides of the same coin: as ships get bigger and companies aim at achieving economies of scale, there remain fewer companies in individual markets,” the review said.

The annual study added it would be difficult for policymakers to create a market where economies of scale were encouraged, but created competition that passed these savings to importers and exporters.

It cited mergers between Hapag Lloyd and Compañía Sud Americana de Vapores (CSAV), announced in December 2014 which created the world’s fourth largest shipping firm, and Hamburg Süd’s tie up with Compañía Chilena de Navegación Interoceánica (CCNI) in March this year, as examples of concentration in the market.

UNCTAD’s Review of Maritime Transport 2015 found although the world’s commercial fleet grew by 3.5 per cent in 2014, this was the lowest rate of annual growth in the past 12 months. There were 89,464 vessels, with a deadweight tonnage of 1.75 million at the start of 2015.

The organisation also warned the overcapacity in the market risks getting worse as shipping firms invest in larger vessels to realise economies of scale.

Greek shipping firms accounted for 16 per cent of the sector, followed by Japan, China, Germany and Singapore. These top five ship-owning nations account for more than half of the world’s deadweight tonnage.

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