Maersk Chief sees further deals in Shipping Container industry

Posted by Daily Shipping Times on 16-08-2017        Tweet

Danish group expects only 5 or 6 survivors from global consolidation

COPENHAGEN : Container shipping groups will continue to do deals, leaving only five or six survivors in an industry that two years ago had 20 players, according to the chief executive of AP Moller-Maersk, the sector’s dominant company.

Mr. Soren Skou told that the consolidation trend in the past 24 months that has seen eight of the top 20 container shipping groups be acquired or go bankrupt would continue.

“My prediction would be that the industry would consolidate further. A decade from now, we would be more in the five to six range,” he said.

The Container shipping industry, a bellwether for global trade, has been in the doldrums since the financial crisis, but many groups, often owned by governments or families rather than listed on the stock markets, had resisted change. Recently however there has been considerable movement.

Denmark’s Maersk Line itself is in the process of buying Hamburg Süd, the German group with a strong presence in Latin America; Hapag-Lloyd has taken over two competitors in recent years; CMA CGM bought NOL; there have been separate mergers between Japanese and Chinese groups; and South Korea’s Hanjin Shipping went bankrupt last year.

Mr Skou said one of the defining forces behind the recent wave of consolidation had been the withdrawal of many governments from the sector, including in the Middle East and Singapore as well as the absence of official support in South Korea. “For Maersk Line, it is never great to compete with somebody who by definition can’t go bankrupt,” he said.

Maersk Line is in a network-sharing alliance with Mediterranean Shipping Company, the number two player in the industry, and together with two similar groups the informal tie-ups control about 80 per cent of global container shipping. But Mr Skou said there were much bigger benefits from full mergers than informal alliances including cost benefits, sharing common balance sheets and improved port operations.

He added that the need for the industry to digitalise could lead to more consolidation. “The investments and costs you have to put into digitalising means there will be an incentive for companies to merge. You still have a lot of companies with weak balance sheets.”

Mr Skou also made his first public comments about the cyber attack that took down all Maersk’s IT systems at the end of June. The company will report first-half results soon, with analysts expecting the attack to have cost it anywhere between $50m and $450m.Mr Skou said Maersk had no evidence it was specifically targeted but that it needed to work on being better able to counter attacks in future.

 

“I don’t think if I’d been asked before these attacks [could a hacker take down all our IT systems in 24 hours] I would have agreed...We need to do whatever we can to defend ourselves against hacking. We need to make sure we can shut it down, isolate [the infected systems] and restore [the rest] quickly,” he added.