Latest news from Heavy Lift & Project Forwarding International Magazine

Destructive freight rate environment here to stay

The container shipping industry is expected to continue to struggle with overcapacity and an inability to deliver value to shareholders, warns consultancy McKinsey & Company in its latest report.

The report, entitled 'Container shipping: More mergers, better mergers', suggested that while container shipping brings significant value to the world, it delivers little to its investors, producing low rates of return.

"We estimate it has destroyed over USD100 billion in shareholder value over the last 20 years," said the report. "Its profitability was particularly poor between 2011 and 2016, when the industry average return on invested capital (ROIC) was consistently lower than the weighted average cost of capital (WACC)."

McKinsey cites overcapacity as the key reason for the poor performance, exacerbated by slowing growth.

The report says that, unfortunately, overcapacity is here to stay and its projections of supply and demand show a continued large gap for several years, which will close by the early 2020s.

"With overcapacity, container lines often accept any cargo, even if it barely covers marginal cost; after all, carrying something extra on today's ship is usually better than carrying air," said the report.

"Many industry watchers are predicting the end of the destructive freight rate environment. Unfortunately, we are not so optimistic."

While the industry is experiencing unprecedented consolidation, McKinsey warns that it is not yet enough to turn the industry around.

 

www.mckinsey.com 

Heavy Lift | News

Middle East to ramp up energy investments thumbnail image

Middle East to ramp up energy investments

January 25 - Rystad Energy said that up to USD240 billion of greenfield oil and gas investments could be sanctioned in 2019, with almost 25 percent of this coming from the Middle East region.
Views: 1995
Leaner and greener shipping to attract investment thumbnail image

Leaner and greener shipping to attract investment

January 4 - Shipping will continue to attract investors in 2019, as long as the industry fulfils its environmental, social and governance (ESG) responsibilities, according to accountant and shipping adviser Moore Stephens. 
Views: 2989
Drewry to scrutinise multipurpose prospects   thumbnail image

Drewry to scrutinise multipurpose prospects  

January 4 - Global shipping consultancy Drewry is hosting a free webinar later this month, looking at the recent trends and outlook for the multipurpose shipping market, covering both the breakbulk and project cargo sectors. 
Views: 2608
All change at Nurminen Logistics thumbnail image

All change at Nurminen Logistics

December 31 - Following a warning about future profitability, Finland’s Nurminen Logistics is streamlining its organisation and making changes to the composition of its group management team.
Views: 2408

Heavy Lift Across The World

Discover heavy lift and project logistics industry news from around the world by region.