The increasing dominance of super-post-Panamax ships in the major east-west trades is forcing smaller, niche carriers out of business on those lanes and raising the barrier to further entries.
This means shippers will have less choice on the major trade lanes and will see less price competition, according to Drewry Maritime Research.
“The list of casualties is now so long that shippers have good reason to question if new blood will ever again be tempted to break the stranglehold of the establishment, and if not, what the consequences will be,” Drewry said in its latest Container Insight Weekly.
Smaller carriers, which operate smaller vessels, cannot compete against the better slot economics offered by the larger ships being deployed by the Top 20 carriers.
Hainan Pan Ocean Shipping, which deployed vessels with an average capacity of 2,700 20-foot-equivalnet units in its CAE Asia-Europe service, ended that service in November.
Grand China Shipping pulled out of the trans-Pacific trade at the end of 2011 only six months after entering it with 2,700-TEU ships. In April 2011, The Containership Company, which was operating its Great Dragon service in the trans-Pacific with 2,580-TEU ships, was forced to withdraw the service.
Also in 2011, PIL and Wan Hai had to withdraw their FES service between Asia and northern Europe because their 4,250-TEU vessels could not compete with the larger, more fuel-efficient ships being deployed by the major carriers.
Since then, MISC completely withdrew from the container market in the middle of last year and focused on the bulk shipping sector.
Drewry said no carrier outside the Top 20 lines operates ships on the Asia-North Europe route any more. And in the trans-Pacific, Wan Hai and Matson are the only non-top 20 carriers still operating vessels on this route. The trans-Atlantic trade still has four medium-sized carriers (Atlanticargo, Eimskip, ICL and Marfret) that operate ships.
“The implication is that there is no room left for small players in the east-west trade lanes, no matter what niche market experience is brought to the table,” Drewry said. “The big players’ economies of scale are now simply too big to overcome.”
The average size of the vessels deployed by the Top 20 carriers increased from 2,941 20-foot-equivalent units in 2009 to 4,200 TEUs in 2012, including vessels as large as 16,000 TEUs. The first of Maersk Line’s 20 18,000-TEU vessels will be delivered later this year.
Drewry said the top 20 carriers are further distancing themselves from niche market players by cascading unwanted 8,000-TEU vessels out of the Asia-Europe trade into the trades between Asia and the U.S. East Coast and the east coast of South America.
“The few remaining niche market services in the main east-west trades are unlikely to survive much longer without acquiring greater economies of scale,” Drewry said.
“The conclusion is that small players should confine themselves to niche markets only in future, meaning that shippers should start getting used to less choice, as well as the concept that big is beautiful even when seen in intra-regional services,” it said.