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2016 non-profit year for world's shipping firms, says CMA CGM's Saade
CMA CGM vice chairman Rodolphe Saade has said that none of the world's top 20 container shipping companies is likely to earn a profit this year, adding there'll be further consolidation in the container shipping industry.
"Consolidation will continue because small shipping lines will not be able to survive," Mr Saade said. "The small to medium operators will be looking for a big brother to acquire them."
Early this week Japan's three biggest shipping companies - NYK, MOL and "K?Line - said they would merge their container shipping operations to create the world's sixth-largest competitor.
The move follows a bankruptcy filing by South Korea's Hanjin Shipping, the world's seventh-biggest competitor in August, the Wall Street Journal reported.
Hanjin is being chopped up and sold in pieces and will either emerge as a small Asia operator or be liquidated. About a dozen shipping companies, mostly small operators of as many as three ships, have also exited the industry over the past several months.
Mr Saade said CMA CGM, the world's third-largest operator by capacity and the lead partner in the Ocean Alliance, isn't looking for acquisitions after taking over Singapore's NOL for US$2.4 billion last year.
The Ocean Alliance would move 40 per cent of the cargo between Asia and the Americas and 35 per cent of the cargo between Asia and Europe when it begins operating in April.
But Mr Saade said other big competitors will be looking at Germany's Hamburg Sud, which might "need to join an alliance or be acquired in order to survive? and to a lesser degree Zim Integrated Shipping Services that is partly owned by the Israeli government.
Shipping executives have estimated that the top 20 operators will post combined losses of up to $10 billion this year as overcapacity continues to squeeze freight rates to the extent that they barely cover fuel costs. They say $1,400 per container is the break-even point.
Mr Saade said he sees growth in moving seaborne cargo to the US as "the economy is doing well and they import quite a lot". Other areas of growth include Australia, as well as Vietnam, Malaysia, Indonesia and Thailand as their low labour costs gradually entice makers of clothes, shoes and household goods to shift their production bases away from China.
For more, visit www.shippingazette.com
"Consolidation will continue because small shipping lines will not be able to survive," Mr Saade said. "The small to medium operators will be looking for a big brother to acquire them."
Early this week Japan's three biggest shipping companies - NYK, MOL and "K?Line - said they would merge their container shipping operations to create the world's sixth-largest competitor.
The move follows a bankruptcy filing by South Korea's Hanjin Shipping, the world's seventh-biggest competitor in August, the Wall Street Journal reported.
Hanjin is being chopped up and sold in pieces and will either emerge as a small Asia operator or be liquidated. About a dozen shipping companies, mostly small operators of as many as three ships, have also exited the industry over the past several months.
Mr Saade said CMA CGM, the world's third-largest operator by capacity and the lead partner in the Ocean Alliance, isn't looking for acquisitions after taking over Singapore's NOL for US$2.4 billion last year.
The Ocean Alliance would move 40 per cent of the cargo between Asia and the Americas and 35 per cent of the cargo between Asia and Europe when it begins operating in April.
But Mr Saade said other big competitors will be looking at Germany's Hamburg Sud, which might "need to join an alliance or be acquired in order to survive? and to a lesser degree Zim Integrated Shipping Services that is partly owned by the Israeli government.
Shipping executives have estimated that the top 20 operators will post combined losses of up to $10 billion this year as overcapacity continues to squeeze freight rates to the extent that they barely cover fuel costs. They say $1,400 per container is the break-even point.
Mr Saade said he sees growth in moving seaborne cargo to the US as "the economy is doing well and they import quite a lot". Other areas of growth include Australia, as well as Vietnam, Malaysia, Indonesia and Thailand as their low labour costs gradually entice makers of clothes, shoes and household goods to shift their production bases away from China.
For more, visit www.shippingazette.com
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