Less shipper choice as smaller lines forced out of east-west trades GRAND China Shipping (GCS), a subsidiary of Grand China Logistics, the Shanghai-based shipping company, which was recently forced into liquidation, is a reminder of the difficulty faced by niche market players wanting to compete against major ocean carriers in the east-west trades, said a Drewry Maritime Research report.
With the list of smaller ships so long going under, shippers are now questioning whether new blood will ever again be tempted to break the stranglehold of the establishment, and if not, what the consequences will be, the report said.
GCS in fact withdrew from the container market as long ago as the end of 2011, only six months after entering the transpacific, but its parent, Grand China Logistics, which in turn belongs to HNA Group, is so strong financially that a return could not be ruled out until the better end. Unfortunately, GCS' bulk shipping interests subsequently turned out to be in an even worse state, so the Hong Kong High Court decided that there was no option to liquidation, said the report.Before that The Containership Company (TCC), was forced to withdraw its innovative small transpacific service in April 2011, and PIL and Wan Hai had to withdraw their FES service between Asia and Northern Europe one month later due to their 4,250-TEU vessels no longer being competitive enough. Also, Horizon Lines withdrew its Five Star Express transpacific service at the beginning of November 2011, said Drewry.
No carrier outside the Top 20 operates ships on the Asia-North Europe route any more, according to Drewry. On the transpacific, Wan Hai and Matson are the only non-top 20 carriers still operating vessels in this route. The transatlantic still has four medium-sized carriers (Atlanticargo, Eimskip, ICL and Marfret) still operating ships.
The implication is that there is no room left for small players in the east-west trade lanes, no matter what niche market experience is brought to the table. The big players' economies of scale are now simply too big to overcome.
Perhaps the message here is that, to compete successfully, new market entrants should focus on niche port gateways, rather than on the major ports used by everyone else, even though recent history shows that it is difficult. TCC's service differentiated itself by calling at Taicang, just next to Shanghai, but it also called in Ningbo and Los Angeles, and operated ships averaging 2,500 TEU.
The conclusion is that small players should confine themselves to niche markets only in future, meaning that shippers should start getting used to less choice, as well as the concept that big is beautiful even when seen in intra-regional services.
With the list of smaller ships so long going under, shippers are now questioning whether new blood will ever again be tempted to break the stranglehold of the establishment, and if not, what the consequences will be, the report said.
GCS in fact withdrew from the container market as long ago as the end of 2011, only six months after entering the transpacific, but its parent, Grand China Logistics, which in turn belongs to HNA Group, is so strong financially that a return could not be ruled out until the better end. Unfortunately, GCS' bulk shipping interests subsequently turned out to be in an even worse state, so the Hong Kong High Court decided that there was no option to liquidation, said the report.Before that The Containership Company (TCC), was forced to withdraw its innovative small transpacific service in April 2011, and PIL and Wan Hai had to withdraw their FES service between Asia and Northern Europe one month later due to their 4,250-TEU vessels no longer being competitive enough. Also, Horizon Lines withdrew its Five Star Express transpacific service at the beginning of November 2011, said Drewry.
No carrier outside the Top 20 operates ships on the Asia-North Europe route any more, according to Drewry. On the transpacific, Wan Hai and Matson are the only non-top 20 carriers still operating vessels in this route. The transatlantic still has four medium-sized carriers (Atlanticargo, Eimskip, ICL and Marfret) still operating ships.
The implication is that there is no room left for small players in the east-west trade lanes, no matter what niche market experience is brought to the table. The big players' economies of scale are now simply too big to overcome.
Perhaps the message here is that, to compete successfully, new market entrants should focus on niche port gateways, rather than on the major ports used by everyone else, even though recent history shows that it is difficult. TCC's service differentiated itself by calling at Taicang, just next to Shanghai, but it also called in Ningbo and Los Angeles, and operated ships averaging 2,500 TEU.
The conclusion is that small players should confine themselves to niche markets only in future, meaning that shippers should start getting used to less choice, as well as the concept that big is beautiful even when seen in intra-regional services.