Maersk Expects Carrier Competition to Shrink to 3 Global Companies

Maersk Cargo Ship pic: Maersk Line

Maersk is the largest carrier by capacity in international shipping and clearly the leader of the industry.

We’ve talked about this before in Universal Cargo’s blog: The moves Maersk makes are copied by the other ocean freight carriers.

When Maersk buys megaships, the industry buys megaships. When Maersk forges an alliance, the whole industry jumps into alliances. When Maersk shifts focus to acquiring smaller competitors… Well, carriers able to do so follow suit.

The ones that are unable to acquire competitors may be the carriers that are acquired.

This is all to say when Maersk says something, the industry listens. And Maersk just said something most carriers probably don’t want to hear. It could mean those carriers won’t be around much longer.

Mark Edward Nero reported in American Shipper:

During a recent media briefing, Maersk Chief Operating Officer Soren Toft said that as growth in the shipping industry slows, merger and acquisition activity may begin to pick up again, according to a report from Singapore news outlet the Straits Times.

“We expect that within – I cannot give a timeframe on it – that you will see maybe a handful of shipping companies, a little bit similar to what you see in the courier express and parcel industry, where there’re really, you know, three global companies,” Toft was quoted as saying.

Just three global companies!

And even though Toft “cannot” put a timeframe on carrier competition shrinking to this level, it sure sounded like he wanted to. Like Maersk expects this to happen relatively quickly.

We’ve seen carriers struggle financially over the last several years, resulting in acquisitions, mergers, Hanjin’s collapse, and carrier alliances.

The desperation of carriers to join alliances in order to reduce costs and simply survive has made the industry dominated by just three alliances. Of course, Maersk isn’t saying three alliances will dominate shipping, but just three companies.

For years, I’ve been writing in this blog that overcapacity, low freight rates, and carrier financial struggles will eventually lead to such a reduced level of competition in ocean shipping that it would be bad for shippers in terms of freight rate pricing.

Because of this, the words of Maersk’s COO don’t come as that big of a surprise. All you have to do is read some of the Universal Cargo blogs over several years to see plenty of evidence that the industry is well on its way to the level of carrier competition Maersk predicts.

In fact, just reading the blog headlines below (and there are even more than these) is enough to see carriers are struggling and competition is majorly shrinking in ocean shipping. Of course, you can also click on the titles to read the corresponding blogs.

While only three global ocean carriers dominating international shipping is a very small number, it is more likely a question of when that will be the case than if that will become the case.