Perhaps we will reflect back on 2016 as a pivotal year for global logistics. The completion of the Panama Canal expansion in June ushered in a new era of ocean shipping, expanding routes and capacity to shippers worldwide. This will lead to more efficient ocean services throughout the eastern coasts of the Americas. But challenges will continue to visit the international steamship lines. Some carriers have succumbed to the financial pressures driven by overcapacity and less-than-stellar demand for transoceanic trade. Others have turned to mergers or strategic alliances to strengthen their position in the market. Looking ahead to 2017, we will continue to see more activity from carriers either merging or exiting operations, lanes, and possibly even entire markets.
In the United States, the trucking industry faces similar challenges in regard to excess capacity. This, combined with low fuel prices, has held down pricing and made for a difficult environment for trucking companies to earn profits. We anticipate, however, that the capacity trend will reverse direction in the near future due to impacts from regulatory changes, hours-of-service and driver shortages. Railroads will also be mindful of this trend reversal as they look to bring back intermodal business lost to highly competitive over-the-road market conditions.
Ahead in 2017, logistics companies will seek to diversify their service portfolios and leverage innovative technologies. Policy changes linked to the new US president and his administration might influence where logistics companies place their investments for growth, but we will continue to see it in the form of mergers and acquisitions — albeit in the form of smaller, targeted acquisitions that add complementary services. In the coming months, and even years, industry challenges will actually serve to drive closer, more collaborative partnerships between shippers and logistics firms.