"The soup is getting thinner," one Asia-Europe beneficial cargo owner (BCO) told IHS Media, voicing disappointment with the latest merger after a wave of consolidation that has cut the number of big shipping companies, further concentrating them into three alliances.
"There are too few options now, and if the carriers in the alliances get their act together, the shippers are in for a tough ride for the next couple of years," the shipper said.
Around 70 per cent of world container trade will now be carried by just six container lines after a tumultuous year that changed the face of the industry. Hanjin Shipping collapsed in September last year and was followed by a series of mergers and acquisitions as carriers searched for profitability through scale and lower unit costs.
Cosco merged with China's second largest carrier, China Shipping; CMA CGM bought Neptune Orient Lines and its APL box unit; Maersk Line bought Hamburg Sud; Hapag-Lloyd merged with UASC, and the three Japanese carriers, MOL, "K" Line and NYK, formed the One Network Express that merges their container shipping divisions.
"There are already too few options left and it is certainly no longer a buyer's market. I know consolidation is a way for carriers to address profitability, but it does not do much for shippers," said the supply chain director for a major European retailer.
AlixPartners' Lim Lian Hoon said shipper choices are being narrowed steadily in the march towards consolidation, but one of the more interesting implications of a Cosco-OOCL tie-up is that the Ocean Alliance will become much easier to align.
"It was four liners but now two of them are very much larger than Evergreen. Structurally it will resemble the 2M-plus HMM alliance," he said. "So if both these carriers are aligned internally it lays the foundations for increasing the probability of liners curbing their individual market share ambitions. That in turn reduces the probability of rates falling rapidly."
Shippers complain that alliances also limit their choices and add costs to their supply chains. An analysis of the networks by SeaIntel found a significant reduction in direct port-to-port combinations.
"This will have a clear impact for shippers and forwarders, as less direct combinations will necessarily lead to more cargo needing to be transshipped," the analyst concluded.