Maersk Line, Mediterranean Shipping Co. and CMA CGM can ride out an attritional rate war on the trans-Pacific better than rival carriers because of their superior economies of scale, according to Drewry shipping consultancy.
The three carriers deploy ships with an average capacity of 8,550 20-foot-equivalent units, 32 percent bigger than the trade lane norm of 6,490 TEUs.
Recent deployment by the world’s top three container lines suggest a clear focus on economies of scale, only calling at ports where their ships have a clear competitive advantage, London-based Drewry said.
The three carriers have cut out North America west coast ports where there is insufficient demand for big ships, or where large vessels can’t call because of physical limitations.
“So it is OK if you want to go directly to Los Angeles, Long Beach or Oakland, but not so good if you want to go to Seattle, Vancouver, Prince Rupert or Tacoma,” Drewry said.
As in the Asia-Europe trades, the carriers also appear reluctant to share their economies of scale with rivals. Slot charters apart, CMA CGM mainly partners with MSC, and Maersk largely shares ships with MSC and CMA CGM.
CMA CGM operates the largest ships in the trans-Pacific with an average capacity of 8,822 TEUs, followed by MSC at 8,712 TEUS and Maersk, 8,108 TEUs.
The top three have a combined 36 percent of trans-Pacific capacity compared with a global market share of 33 percent.
“Maersk Line, MSC and CMA CGM consequently have tremendous economies of scale over others, enabling them to ride out the current eastbound freight rate war more comfortably,” Drewry said.
“Carried through to a global level, it probably explains why CMA CGM and Maersk were among the most profitable of all major ocean carriers at earnings before interest and tax level last year,” Drewry said. MSC’s financial performance isn’t known as the Geneva-based carrier is privately owned.
“It also explains why carriers, such as APL and Hanjin, whose trans-Pacific cargo accounts for a larger proportion of their total liftings (29 percent and 41 percent, respectively, in the first quarter of 2013), yet operate vessels well below the average size, were among the poorest.”