Understanding freight forwarding steamship line consolidation

Since 2015, steamship lines in the freight forwarding industry have gone through major changes with Steam ship linescarriers consolidating to gain economies of scale, additional market share and cost reductions. We also experienced the painful Hanjin bankruptcy. Major branded carrier companies will drop from 17 in 2015 to 10 heading into 2018 when three Japanese carriers are slated to combine operations. Here’s a review of activity from 2015 to date:

  • In 2015, Chinese carriers COSCO and China Shipping merge;
  • In 2016, CMA CGM’s purchase of APL;
    • Hapag-Lloyd merging with United Arab Shipping Company (UASC);
    • Hanjin going out of business;
    • Japanese carriers MOL, NYK, K Line agree to combine operations in 2018 (referred to now as J3 until the name is known);
    • Maersk purchasing Hamburg Sud; and
    • Leaving ZIM, Hyundai (HMM), Evergreen, OOCL, and Yang Ming, business as usual for now.

As a result, the freight forwarding industry has gone from four alliances to three. Unfortunately, shippers are faced with service and pricing uncertainty in how all this will play out in an industry faced with overcapacity and pricing inconsistency.

Another shipper concern in the freight forwarding industry is this question: what happens to relationships built with carriers being taken over by other carriers? These are relationships shippers may have built over years and relied on to get service issues and pricing problems addressed quickly. Experience tells us those valued relationships will probably change or disappear as carriers consolidate operations.

Words to stay wise in freight forwarding

It will be very important for shippers to stay on top of all the developments and changes created by steamship line industry consolidation. Shippers should start reaching out to carriers and industry experts/NVOCC specialists to stay informed of changes and to start building relationships quickly. Watch the rollout of the three alliances. It would be a good idea to have carrier relationships in each alliance to keep up to speed on service route changes, port rotations, and capacity developments. Or work with your NVOCC specialist to ensure you have carrier options in the three alliances.

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