Small liner companies will come under “great pressure” to consider consolidation during 2017 according to shipping consultancy Dynamar, owing to tough industry conditions.
Research from the analyst’s annual ‘Top 25 Container Liner Operators’ publication shows that the combined net result of twelve reporting lines fell by more than US$13bn during the first nine months of 2016.
The previous year had marked the first time the globe’s largest 25 operators collectively posted a net loss.
The consultancy’s research indicates that ten of 12 top carriers lost US$163 per teu on average over the first nine months of 2016.
Over the first three quarters of last year, spot rates quoted for the 10,500 nautical miles Shanghai – Rotterdam leg were US$618 per teu on average.
Quotations ranged between US$205 in March and US$699 in July according to Dynamar.
Meanwhile, the number of weekly services between North Europe and the Far East fell to 16, down from 32 ten years ago.
One of the factors behind this is the increasing presence of ultra-large container vessels (ULCVs) with 18 of the top 25 lines controlling 100% of all ULCVs in operation and 94% of the orderbook.
This equates to 366 ships, covering 4.9m teu, and 156 vessels with a total capacity of 2.7m teu respectively.
Hence, since 2005, capacity has outgrown carryings by 38% while the top 25’s share of global capacity has risen to 87%.
By the end of 2016, 178 ULCVs with an average capacity of 15,300 teu operated within North Europe and Asia.
The analyst blamed “too many too big” ships for the severe overcapacity, which induced a “bitter rate war” and ensured dramatic losses.
Nevertheless, Dynamar noted that as of the end of 2016, industry confidence is at a 15-month high.