LONDON : The consolidation drive in the Container shipping sector through mergers and acquisitions is likely to slow down in 2018, according to iContainers.
Instead, this is likely to pivot to freight forwarders, where the industry can expect to see an increase in M&A talks.
“In terms of carriers, I doubt we will see any more movements in the near future. I don’t see any major players breaking right now. Any acquisitions that were to take place now would be a purely strategic move, or if an opportunity presents itself for one of the bigger carriers to buy up a younger one,” Klaus Lysdal, Vice President of Sales & Operations at iContainers, said.
Amid a prolonged market downturn, many carriers resorted to forming alliances and setting agreements on slot purchases. These allowed them to gain cost-effectiveness by combining their resources without risking further debt. Such movements have had its effects trickle down to shippers, the online freight forwarder added.
The latest M&A round saw Japanese carriers NYK, MOL and K Line merge their containership business within the Ocean Network Express (ONE), scheduled to start operations on April 1, 2018.
Creation of ONE came on the back of M&A deals involving CMA CGM and APL, Cosco and CSCL, Maersk Line and Hamburg Süd, and Hapag-Lloyd with UASC.
“We’ve seen so many consolidation activities that there are now a lot fewer options for shippers to choose from and less flexibility with the number of carriers so dramatically reduced,” Lysdal explained.
“But on the other hand, the good thing that has come out of all of this is some very much-needed rate increases to make the industry healthier overall.”
Lysdal believes freight forwarders may also be mimicking the move and engaging in their own M&A activity for strategic growth purposes, with mid- and large-ranged forwarders acquiring tech-savvy companies as a shortcut into the digital market.