The container shipping industry has experienced a multitude of financial and logistical challenges in 2015-2016. These adverse conditions have caused shipping lines to review their performance and adopt an operational strategy that focuses on prudence and efficiency.
Prudent [Pru-dent] acting with or showing care and thought for the future.
In perhaps the greatest example of the action shipping lines are taking to demonstrate their commitment to improving operations in 2017 (and beyond), A.P. Moller-Maersk recently announced that it will divide its shipping and energy holdings. This move will allow the company to participate in opportunities in each individual sector, that it may have previously overlooked as a conglomerate. This means more focus on Maersk’s shipping and logisitics services.
If you are investing in containers, or have gained access to the shipping industry through other means, the industry’s new focus offers a much more stable environment for you to forecast your investment returns. After all, less adversity in the market means more confidence for investors.
Partnerships & Alliances.
As the environment became more challenging in the shipping sector, container lines looked to establish partnerships and alliances with competitors and rival companies. This approach provides logistical advantages and has allowed container lines to pool their maritime assets and more efficiently deliver services to customers.
At the moment, the industry’s three established partnerships are:
- 2M Alliance – Maersk, Mediterranean Shipping Company
- Ocean 3 Alliance – CMA CGM, UASC, COSCO Shipping
- THE Alliance – Hapag-Lloyd, Kawasaki Kisen Kaisha Ltd. (K-Line), Mitsui OSK Lines Ltd., Nippon Yusen KK (NYK), Yang Ming Marine Transport Corp.
New Services and Trade Routes.
Industry leaders have also reviewed their shipping routes to maintain their operational efficiency. For example, in a move that focuses on the more profitable and prudent shipping opportunities in China, Maersk Line has removed 10 Chinese ports from their ports of call.
For many of the industry’s leaders, South American markets have demonstrated strong demand and shown they can be profitable. To benefit from this prosperity, the Mediterranean Shipping Co., CMA CGM, Hapag-Lloyd, Hamburg Sud, China Shipping, and Hyundai Merchant Marine are revising their existing services on the Asia-West Coast South America routes. In May of 2016, Maersk Line added a new southbound weekly shipping service between North Asia and the west coast of Latin and South America.
It’s Good News!
The container shipping industry is a business like any other business. And, in business, profit tops the list of important things to focus on. For leaders in this sector, it has meant taking prudent measures to reduce operating costs and increase their profits.
Some container shipping lines have introduced new, more profitable services and routes, while others have sought to strengthen ties with other companies and work in partnership toward making more money. In either case it means a rise in confidence in the industry, and that is good news for investors and container shipping lines.