Containing losses, sailing together
Junyuan Petroleum, November 23, 2016
Trade woes are pushing container shipping firms into new alliances, reshaping the troubled industry
As global trade flows shrank over the last five years, red ink blotted container shipping lines' financial results, pushing them into alliances that are reshaping the market, creating new buzz phrases like resource integration, big size, operational efficiencies and route specialization.
Hanjin Shipping Co, South Korea's largest ocean shipping company by fleet size, launched bankruptcy proceedings following years of losses in September. This has rocked the global trading system, which includes foreign governments. Creditors seized ships, ports refused to handle Hanjin-linked cargo.
"Container shipping firms' alliances have become critical as the global shipping industry has been confronted with both cumbersome overcapacity and volume slowdowns," said Wang Haimin, managing director of COSCO Shipping Lines Co Ltd, the container unit of China COSCO Shipping Corp Ltd, a State-owned enterprise and the country's biggest shipping company by fleet size.
Despite the current good demand globally, Wang said the container shipping sector may continue to suffer in the short term as freight rates have dropped quickly in recent years, prompting a wave of consolidation in the container industry.
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