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Container market still competitive - Drewry

Logistic News - Published on Wed, 17 Jan 2018

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With nearly 400 different vessel operators plying their trade worldwide there is plenty of competition and potential for more M&A activity. The collapse of freight rates during the second half of last year, far out of line with the underlying supply and demand fundamentals, suggests that carriers have not yet rid themselves of certain self-sabotaging traits and that talk of a new golden age for carriers was perhaps exaggerated.

However, despite the recent developments, in the latest Container Forecaster report Drewry retains it view that the carriers are heading towards a brighter future, while also acknowledging there are several temporary factors that have created a bump in the road to recovery.

One area that might have been expected to have provided a more immediate benefit was the significant consolidation occurring in the market. The fact that M&A hasn’t so far materially changed anything is not that surprising on reflection. The latest consolidation wave has barely become operational, with most transactions either just concluded or still pending. Moreover, even after all of the latest deals are finalised, they alone do not have sufficient weight to move the industry all the way to being a non-collusive oligopoly, which we previously outlined as being necessary to herald a new era of ‘liner paradise.’

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Posted By : Nanda Koijam on Wed, 17 Jan 2018
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