Daily Digital Magazine: Pg. 4 — May 10, 2019

Khouri outlines ‘disruptors’ for container shipping

The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”

   Continued low freight rates may spur on the container shipping industry to further contract, said a U.S. Federal Maritime Commission official in a speech during the Virginia Maritime Association’s annual banquet Thursday evening.
   “While not a prediction, it is fair to say that if the overall rate structure for carriers does not improve to the point that the container carrier industry, as a whole, is earning its cost of capital, then business history across any or all industry sectors points toward more consolidations, mergers and acquisitions,” said FMC Chairman Michael Khouri.

Khouri outlines ‘disruptors’ for container shipping

The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”

Khouri outlines ‘disruptors’ for container shipping

The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”

 
Continued from previous page
   Continued low freight rates may spur on the container shipping industry to further contract, said a U.S. Federal Maritime Commission official in a speech during the Virginia Maritime Association’s annual banquet Thursday evening.
   “While not a prediction, it is fair to say that if the overall rate structure for carriers does not improve to the point that the container carrier industry, as a whole, is earning its cost of capital, then business history across any or all industry sectors points toward more consolidations, mergers and acquisitions,” said FMC Chairman Michael Khouri.
   Khouri noted that for the past 10 years the container carriers have been financially hampered, mostly due to their inability to secure and maintain compensatory freight rates from their shippers.
   The carriers’ container freight rates have remained flat during the past decade, and when adjusted for inflation, Khouri said those rates overall are down by 29 percent.
   Khouri also said the industry continues to be challenged by surplus containership capacity, which shows no sign of abating, particularly with the continued arrival of new and larger vessels. On top of this scenario, the global economy appears to be losing steam, resulting in lower projected cargo volumes in the next several years. “And the alliance structure we see today will be quite different,” he said.
   In addition, Khouri pointed out the potential impact of the International Maritime Organization’s Jan. 1 mandate for the ocean carriers to use fuel that contains no more than 0.5 percent sulfur content. This shift to a lower sulfur content in bunker is projected to cost the carrier industry upwards of $15 billion.
   “And there may be other changes in the maritime landscape that simply defy predictions,” Khouri said. “Trade disputes, changing trade patterns, nontraditional participants such as new technology and new supply chain and logistics models entering the business — all of these ‘disruptors’ can completely upend traditional ways of doing business.”

I think LNG is a transitional fuel. It’s not the fuel for the future.  However, it meets all the regulations that’s out there ... vessels need to operate under until 2050. It gets us through until we figure out what that next fuel is.

Seven container liner shipping companies deploy capacity on the India Subcontinent to North America (US/CA) trade, with Maersk Line deploying the most capacity each week towards the trade, according to BlueWater Reporting’s Carrier/Trade Route Deployment Report.

Most Popular
Latest News
Social Media

Loading...

FMC wants details on joint terminal ventures

Industry reps want customs in WTO e-commerce talks

Embed this story

Share Code Version 1

This version will embed the story headline and includes HTML fallback protection, ensuring the story will display even if some users decide to disable javascript in their browsers.

Copy & Paste the following code to embed this story on your website:

Preview

Khouri outlines ‘disruptors’ for container shipping

The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”

May 10, 2019 on Dec 27, 2018AmericanShipper.com

Share Code Version 2

This version will embed the story headline without any styling applied. Use this version if you will use your own custom styling on your website. This version also includes HTML fallback protection.

Copy & Paste the following code to embed this story on your website:

Preview

Khouri outlines ‘disruptors’ for container shipping

The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”

May 10, 2019 on Dec 27, 2018AmericanShipper.com