The United Nations Conference on Trade and Development (UNCTAD) has released its annual Review of Maritime Transport, a 204-page book that can be downloaded online.
The 2013 review notes that its Liner Shipping Connectivity Index (LCSI) and analysis of container ship deployment finds that there are two important trends over the last 10 years “which represent two sides of the same coin.
“On the one hand, ships have become bigger, and on the other hand, the number of companies in most markets has diminished. As regards the number of companies, the average per country has decreased by 27 percent during the last 10 years, from 22 in 2004 to just 16 in 2013.”
The review says, “This trend has important implications for the level of competition, especially for smaller trading nations. While an average of 16 service providers may still be sufficient to ensure a functioning competitive market with many choices for shippers for the average country, on given individual routes, especially those serving smaller developing countries, the decline in competition has led to oligopolistic markets.”
UNCTAD said, "Overall, thanks to larger ships and more container carrying capacity deployed from and to the world’s ports, the average LSCI in most countries shows that their connectivity has increased. Since 2004, 120 countries recorded an improved LSCI, while the LSCI in 39 countries went down."
UNCTAD said the "LSCI is generated from five components which capture the deployment of container ships by liner shipping companies to a country’s ports of call as follows: (a) the number of ships; (b) their total container carrying capacity; (c) the number of companies providing services with their own operated ships; (d) the number of services provided; (e) the size (in TEU) of the largest ship deployed.
It says freight rates have remained suppressed by a steady delivery of new buildings into an already oversupplied market, coupled with a weak economy.
The review notes, “In this difficult shipping context, many private equity funds have seized the opportunity created by tight credit markets and historically low vessel values to invest in ships and shipping companies. Between 2011 and 2012, private equity funds financed no less than 22 shipping transactions with an aggregate magnitude of more than $6.4 billion.
The role of private equity funds appears fundamental for the growth of the sector and could affect its development in several ways, including through the consolidation and vertical integration of transport services."