Container Lines' Profitability brings market stability : Ocean Network Express CEO

Posted by Daily Shipping Times on 09-03-2018        Tweet

LONG BEACH, CALIFORNIA: A profitable Container shipping industry is entering a period of stability following the industry-wide disruption caused by consolidation and the changing alliances, said Ocean Network Express (ONE) CEO Jeremy Nixon recently.

While there was room for “a little more” consolidation, Nixon told the TPM 2018 conference that from the product and network perspective, he expected to see stability continue over the next two years.

“Companies go through the consolidation process if profitability is bad for their industry and if their balance sheets are under distress, and right now we are moving into a positive phase with a lot of those balance sheets cleaned up and beginning to improve,” he said.

This more-stable operating environment was leading to better defined strategies by the bigger carriers, Nixon said in response to a question on Maersk Group’s stated intention to become a global integrator of container logistics.

“What you are seeing is larger, stronger companies emerging and they need to be very clear on what their market strategy is. They need a clear go-to-market strategy and a clear business plan, execute that very well and work out their segment strategy,” he said.

He said the mega-carriers of Maersk, COSCO, MSC and CMA CGM also had to differentiate themselves from each other where they can. “This idea of becoming a one-stop ship, a full blown integrator — okay, that is their go-to-market strategy and it will be interesting to see how that plays out," Nixon said. "For ONE, we will follow very closely the liner model and are now looking to expand into the logistics space, particularly into the 3PL area. We are just focusing very clearly on the liner product, basic shipping 101.”

The new ONE carrier, a merger between the big three Japanese carriers NYK, MOL and “K” Line, will launch its operations in April with cargo booking changing from the legacy lines to ONE from next week. Nixon said as the new carrier rolled out its service offering, the main focus in 2018 would be to ensure a smooth transition of the three Japanese carriers to the ONE network, and any hunt for new, value-adding landslide options would be left for 2019 and 2020.

“We have a strong inland rail service in the US and our own terminals, but we are not looking at moving out of that liner space where we are now,” he said.

ONE will inherit terminals in Tacoma, Oakland, San Pedro, Jacksonville and in New York. Its services will call at the three San Pedro terminals in eight trans-Pacific loops that Nixon said were at a reasonably high level of utilization.

“We will keep it really simple in 2018 and want to keep the loops and terminals stable, focusing on the gate turn times, looking at how we are set up on day one for the ONE vessels. 2018 is all about ensuring a very smooth delivery and a smooth changeover from the three legacy companies to ONE. We will look at the strength of the three terminals and how to enhance that, and then look longer-term because those three terminals have different lease times.

But we will keep our feet on the ground in 2018 and keep the strategic stuff for later on,” he said.