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SOLAS box weigh-ins benefit big fish at expense of small fry: Stifel

THE UN's new container weight verification rule that comes into force on July 1 stands to benefit big multinational concerns at the expense of smaller ones, according to logistics investment analyst Stifel, reports Lloyd's Loading List.

"The onset of more regulations favours the larger players, squeezing out the smaller companies and raising the barriers to entry," said Stifel in its quarterly update on the freight forwarding market. 



Under the IMO's amendments to its Safety of Life at Sea (SOLAS) convention the regulation is expected to bring new business to forwarders and major shippers and the expense of smaller players.



It indicated that the potential for the new SOLAS rules to bring additional business to forwarders was one of the few bright spots within a generally flat market, said the report. 



"Nothing in the international air freight or ocean freight data suggests much economic growth around the world. In the US, we have bloated inventories and 1Q16 also faced a difficult comparison due to last year's west coast port slowdown that disrupted supply chains and led to some temporary air freight demand," said the Stifel report.



"We have been writing for some time about the bifurcation between the 'haves' and the 'have nots' in global forwarding, where the best operators grow market share and expand margins, while the underperformers lose market share and see their margins shrink. 



"This trend has been suspended, as Expeditors is facing tough comparisons due to its trans-pacific exposure and DSV is integrating its recent purchase of UTi Worldwide," said the report.



It said first quarter financial results for the major publicly listed logistics groups "were mixed, due to different lane exposures and other issues" such as merger and acquisition issues or a focus on internal company turnaround issues.
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