Maersk CEO sees 5 - 6 survivors after merger spree plays out
THE CEO of the world's biggest shipping conglomerate, Maersk Group, says corporate mergers are expected to leave only five or six survivors from the 20 big firms that operated two years ago.
AP Moller-Maersk CEO Soren Skou told London's Financial Times that the consolidation trend over the last two years that has seen eight of the top 20 container shipping groups be acquired or go bankrupt would continue.
"My prediction would be that the industry would consolidate further. A decade from now, we would be more in the five to six range," he said.
Denmark's Maersk Line itself is in the process of buying Hamburg Sud, the German group with a strong presence in Latin America; Hapag-Lloyd has taken over two competitors in recent years; CMA CGM bought NOL; there have been separate mergers between Japanese and Chinese groups; and South Korea's Hanjin Shipping went bankrupt last year.
Mr Skou said one of the defining forces behind the recent wave of consolidation had been the withdrawal of many governments from the sector, including in the Middle East and Singapore as well as the absence of official support in South Korea.
"For Maersk Line, it is never great to compete with somebody who by definition can't go bankrupt," he said.
Maersk Line is in a network-sharing alliance with Mediterranean Shipping Company, but Mr Skou said there were much bigger benefits from full mergers than informal alliances
That included cost benefits, such as sharing balance sheets and improved port operations.
Consolidation would ease the vote vital task of digitisation. "The investments and costs you have to put into digitalising means there will be an incentive for companies to merge," he said.