Cash-strapped container carriers are retreating to port-to-port operations from door-to-door services, allowing freight forwarders to increase their ocean market share, according to industry consultant Drewry.
Maersk’s sale of its U.S. trucking unit Bridge Terminal Transport is the latest evidence that “a mixture of financial necessity and commercial reality is further forcing ocean carriers to return to providing core services only,” the London-based consultancy said.
The move by carriers to focus on their port-to-port business has gained momentum in recent months, according to Drewry. Maersk announced the sale of its European rail business, ERS Railways to U.K.-based Freightliner in June, and Israeli carrier Zim Integrated Shipping Services sold its holdings in two companies that own container manufacturing plants in China in May.
A month earlier, Mediterranean Shipping Co. announced the sale of 35 percent of its Terminal Investments port unit to Global Infrastructure Partners. In addition, CMA CGM in January sold 49 percent of its container terminal subsidiary Terminal Link to China Merchants.
“The implication is that the provision of home-grown logistics services by ocean carriers is becoming a distant dream that is unlikely to be resurrected in the near future,” Drewry said.
The one exception where ocean carriers can successfully extend their range of services beyond the port is the provision of rail- and barge-based intermodal services by leveraging their volumes and buying power in markets where they are competitive with trucking.
The more than doubling in carrier debt in the past five years to $100 billion from $47 billion, extremely weak profitability during the period and surplus of capacity “have further pushed ocean carriers into a port-to-port mentality suitable to commodity pricing,” Drewry said.
This has made it easier for independent forwarding agents to provide more customer-focused supply chain management solutions.
“Whereas ocean carriers have been encouraged to automate many customer-facing functions to cut costs (such as cargo bookings), forwarders’ greater profitability has enabled them to move up the value chain,” Drewry said.
Drewry estimates that forwarders’ share of the ocean freight market has risen to 51 percent from 35 percent in 2009 and just 15 percent 20 years ago when ocean carriers were still contesting the less-than-containerload market.
Forwarders’ market share varies between trades, remaining fairly static at around 38 percent on the eastbound trans-Pacific route in recent years, while growing to 66 percent on the westbound leg of the Asia-Europe trade from just over 50 percent in 2009.
Ocean carriers will continue to be increasingly restricted to the provision of port-to-port services, but more involvement in door-to-door services is possible wherever more competitive intermodal services are offered, Drerwy concludes. “The issue of who should offer them is a completely different ball game.”
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