A tumultuous year in the container-shipping industry, which included one big operator going under and others bundling together to stay afloat, ended with three major alliances poised to dominate ocean trade for years to come.
Container shipping, which moves 95% of all manufactured goods, is estimated by industry executives to be worth $1 trillion a year. Traditionally controlled by sovereign-wealth funds and deep-pocketed individuals, it has been a fragmented industry over the past 30 years, with dozens of operators regularly undercutting each other on price.
But overcapacity and sluggish global trade have forced the biggest players to merge or form alliances, allowing them to cut operating costs by hundreds of millions of dollars by sharing ships and port calls. The three major groupings, called 2M, Ocean Alliance and THE Alliance, have cleared most regulatory hurdles over the past two years.
According to marine-data providers, the three alliances, which comprise 11 shipping operators, will handle much of the container trade on the Asia-to-Europe and trans-Pacific routes.
“The few players left outside will either try to join in, shrink to become regional operators or go belly up,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting, adding the world’s 20 biggest shipping companies are all expected to post a loss for 2016.