Marcus L. Arky, Principal, Metro Group Maritime

https://www.mgmus.com
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Marcus L. Arky

A few factors will continue to keep ocean freight rates low. The various container line combinations will not relieve the greatest stress on the industry: too much supply and not enough demand. Of course, there are some operational efficiencies that occur when two or more lines merge, but the combined TEUs of the new consolidated organization will be about the same as the aggregate TEUs of the contributing organizations. Moreover, the flattening of the world will not encourage global shipping. For example, the Chinese manufacturing sector will first need to satisfy the consumer needs of their recently created middle class. The US presidential election and Brexit may be precursors to decreased free trade and global trade.

Carriers will also feel the pressure of some merchant traders contemplating creating their own fleets to support their trading. There is historical precedent from the East India Co. and their maritime service to Chiquita and the Great White Fleet. Will a trading disruptor such as Jeff Bezos of Amazon further the size of their in-house carrier operations to include container ships? The price of a container ship just might be low enough these days for Amazon or a similar company to consider private carriage with their own container ship or ships.

Similarly, logistics companies and marine drayage motor carriers will consider further controlling their transportation operations by buying their own fleets of chassis.