Artikel Nummer: 199

Ships are the most critical issue - The Hamburg Süd Group

At a recent meeting of the Propeller Club, Port of Basel, Dr Ottmar Gast, the chairman of the Hamburg Süd Group's executive board, gave a lecture on the current market situation in and the challenges faced by the container shipping industry. Jutta Iten took the opportunity to ask him about his views on the future for the industry.

Dr Ottmar Gast made his key point at the very start of his presentation, stating that «the industry is subject to the desire of container transport customers to always pay the lowest possible price.» Market participants are therefore forced to offer competitive prices, and only carriers of a certain size are in a position to do so. He illustrated his point with a graph showing that the sizes of the 20 largest container shipping companies in the world have not changed a lot in the last six years.

The three largest – Maersk, the Mediterranean Shipping Company (MSC) and CMA CGM – have remained at the top of the rankings, but the gap to their competitors, as well as the market share of each of these three players, have increased.


Reasons for the decline in growth

Some shifts have occurred in the industry too, however. Hamburg Süd moved up from place 17 to 12 in the rankings, whilst Hapag-Lloyd, for example, managed to hold its position. «It’s interesting that there haven’t been mergers in the years we’re discussing, and that not one carrier has faced insolvency,» Gast noted.

The crisis hit in the third quarter of 2008, when the world still seemed in order. After the poor results of 2009 there was an artificial recovery for a few months in 2010. But since then the industry has again been burdened by overcapacities and high fuel prices.

Gast said that «our worry is that the industry will continue to suffer.» He is convinced that «capacity will grow more than demand in 2013.»


Abrupt end of growth

The reasons for the above-average growth that was recorded in the past can be explained mainly by two factors. Firstly, there still were goods that were not transported in containers but in conventional freighters. This development has come to an end.

«We transport anything in boxes that fits into a container these days, even copper in large quantities.» Secondly, the rate of growth of the division of labour has declined globally, and this may not change in the future either, especially as it is evident that despite threatened overcapacities, some shipping companies are ordering newbuildings. The reasons for this are the lower prices and greater operational efficiency of new units. The excess capacity will have an impact on freight rates, of course.

Even if these have recovered somewhat, the bunker price, meanwhile, has increased dramatically, and will continue to rise sharply in the coming years too, not least because of the new rules for the mandatory use of low-sulphur fuels. Nonetheless, transportation costs, compared with the cost of the final product, are still very low.


Grappling with the rates

Yet this does not prevent market participants pushing rates down further, by undercutting each other in order to poach each other’s customers.

The aim is to fill ships to capacity and increase market share. According to Gast, «as long as there is excess capacity, it’ll probably be impossible to make shipping companies behave rationally.»


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