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Container market remains competitive

As the container market remains competitive, global shipping consultancy Drewry says there is potential for more merger and acquisition (M&A) activity.

The collapse of freight rates during the second half of last year was out of line with the underlying supply and demand fundamentals, says Drewry. This suggests that carriers have not yet rid themselves of certain self-sabotaging traits and that talk of a new golden age for carriers was perhaps exaggerated.

Despite the recent developments, in the latest Container Forecaster report, Drewry retains its view that the carriers are heading towards a brighter future, while also acknowledging there are several temporary factors that have created a bump in the road to recovery.

One area that might have been expected to provide a more immediate benefit was the significant consolidation occurring in the market. Although, on reflection, its limited impact is not that surprising as the latest wave of consolidation has barely become operational, says Drewry, with most transactions either just concluded or still pending.

Even after all of the latest deals are finalised, Drewry predicts that they will not have sufficient weight to move the industry all the way to being a non-collusive oligopoly, which it previously outlined as being necessary to herald a new era of 'liner paradise.'

Drewry adds that it perhaps overlooked the risk that the merger activity would make some acquisitive companies more aggressive with their pricing, to minimise customer attrition.

 

www.drewry.co.uk

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