Rod Riseborough, CEO, CTS Ltd.

https://www.containerstatistics.com
Author picture

Rod Riseborough

Without a doubt, the key factors affecting the container trades in 2017 will be consolidation and the creation of three new, major alliances.

The creation of the Ocean Alliance, 2M (with the possibility of Hyundai) and the THE Alliance will once again change the face of east-west container trades, and, hopefully, will provide the long-term stability that the big trades need. For a variety of reasons, recent alliances have had a very limited lifespan of three years, or even less, barely long enough to settle down, before more changes take place.

The recent announcements on consolidation with CMA CGM buying APL, the merger of Cosco and China Shipping, and the recent Hapag-Lloyd and United Arab Shipping Co. merger have all played their part in the recent round of merger. The integration of the three Japanese container lines into a single entity will help provide this long-term stability, although this does not mean the end of the consolidation process.

The success of the new alliances will also be affected by a number of other issues, not least will be how lines deal with growing capacity, which, despite unprecedented scrapping is still increasing, with idle vessel capacity having reached an all-time high, helped to a large degree by the current surplus of Panamax vessels, and the placing in receivership of Hanjin.

What we all need in the container trades is sustained growth in cargo volumes around the world — it is highly unlikely that we will see the growth rate multiples of 6 or 7 time GDP that we saw a decade ago, and we are more likely to see growth rate multiples of 1 to 2 times GDP. Even at these historically low levels, however, stable growth is something that we all need, although some of the recent political events that have taken place may not help to achieve this.