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The dominance of top container shipping lines.

05/04/2024 17:33

The development of container transport is accompanied by a trend of market concentration towards a few mega-scale carriers.

Arrowroot starch produced by APFCO is containerized and exported from Chu Lai Port.

Container shipping plays a pivotal role in global trade, transporting 163 million TEUs in 2022. Over the period from 1980 to 2022, it experienced an average annual growth rate of 6.1%, compared to the general maritime transport growth rate of 2.8%. While container vessels accounted for less than 25% of the total volume of maritime cargo, they contributed significantly to the value, representing 66% ($8.882 trillion USD). Goods transported via container ships accounted for 37.5% of the international trade value.

Market structure

According to Alphaliner's statistics for March 2024, the global container fleet comprises 6,868 vessels with a total capacity of 29.1 million TEUs. The top 100 shipping lines hold approximately 98.2% of the transport market share, with the top 12 lines alone holding 87%.

Notably, among them, 52 shipping lines hold a market share of less than 0.08% with a fleet of vessels under 22,000 TEUs, which is lower than the capacity of the largest container vessel currently (24,300 TEUs). The group of top 12 largest shipping lines virtually controls all vessels over 10,000 TEUs. In 2022, out of 665 vessels in this super-large group, only 6 vessels (below 15,000 TEUs) were not operated by the top 12.

Within this group of 12 shipping lines, there is also significant polarization, with over 10% of the market share belonging to the top 4 largest lines: MSC (Switzerland) - 19.8%, Maersk Line (Denmark) - 14.5%, CMA-CGM (France) - 12.5%, and COSCO (China) - 10.6%. The next group includes shipping lines from Germany, Japan, South Korea, Israel, and Singapore.

The three East-West corridors (Trans-Atlantic, Trans-Pacific, and Asia-Europe) connecting Asia, Europe, and North America play a backbone role, accounting for 38% of the global throughput (60.9 million TEUs in 2022). Additionally, the global maritime sector also includes North-South or South-South corridors connecting with Latin America (15.1 million TEUs) and Africa (15.5 million TEUs).

Over 93% of the market share on the aforementioned routes is held by the top 12 shipping lines. This group also controls nearly 65% of the intra-Asia market, the most densely trafficked region (40 million TEUs) connecting key import-export centers in Northeast Asia (China, Japan, South Korea, Taiwan), Southeast Asia (Vietnam, Thailand, Singapore), South Asia (India, Pakistan, Bangladesh), and the Middle East.

The trend of concentration

The market is increasingly dominated by a few mega-scale operators. The market share of the top 4 has increased from 17.8% in 1995 to 33.7% in 2010 and 57.3% in 2024. Similarly, the market share of the top 5-12 has also increased from 19.8% to 24.1% and 29.2%. In contrast, there is a decline in the shares of other groups, especially those outside the top 20, decreasing from 50% to 15.2% and 9.6%.

The gap in market share between the top shipping lines and the following groups is widening. In 1995, Sealand (the largest shipping line) held a market share of 5%, while UASC (ranked 21st) had nearly 1.1%. Currently, MSC holds a market share of around 20%, compared to TS Lines (position 21) with only 0.3%.

By the mid-2000s, most of the shipping lines in the top 20 operated on long-haul transcontinental routes. Nowadays, this activity is mainly confined to the top 12. This group could be tentatively referred to as global carriers, with representatives from 10 countries in Asia and Europe, without any representation from the Americas or Africa as before.

Mergers and acquisitions (M&A) activities have significantly narrowed the global carrier group. Among the top 7, except for MSC and Evergreen, which pursue organic growth strategies, other competitors utilize M&A to rapidly expand their scale. Maersk Line invested $8.1 billion to acquire major competitors such as Safmarine and Sealand (1999), P&O Nedlloyd (2005), and Hamburg Süd (2017). From a market share below 5%, COSCO skyrocketed after acquiring CSCL (2015) and OOCL (2018). CMA-CGM phased out the APL brand after acquiring NOL (2016). Hapag Lloyd also successfully acquired CP Ships (2005), CSAV (2014), and UASC (2016). In 2023, rumors emerged about Hapag Lloyd's interest in acquiring HMM. ONE is the only new brand in the top 12 since 1995, formed by the merger of three long-standing Japanese names in 2018: NYK, MOL, and K-Line.

Before 2014, countries like China, Singapore, Germany, South Korea, and Japan owned two to three global shipping lines. Nowadays, they only have one shipping line under the influence of the aforementioned M&A activities or bankruptcies, as in the case of Hanjin in 2017. Taiwan is an exception with three shipping lines in the top 12: Evergreen, Yang Ming, and Wan Hai. However, it is not excluded that Taiwanese shipping lines may undergo mergers to create new forces, as has happened with Chinese-Hong Kong and Japanese shipping lines.

The narrowing gate for other groups.

The dominance of the top 12 limits the market for other competitors in regional, domestic, or feeder carrier routes. Some new shipping lines have emerged in the top 20 but with limited coverage. Unifeeder (Denmark) operates short-haul routes in Europe. Sinokor, KMTC (South Korea), and SITC (Hong Kong) operate in intra-Asia routes. IRISL focuses on the Caspian Sea and Persian Gulf regions. Zhonggu is the largest domestic carrier in China, with its first international route launched in 2021 connecting to Vietnam.

As a major manufacturing hub, Southeast Asia has favorable conditions for developing maritime transport activities. However, currently, there are only 14 active shipping lines in the region: Singapore (6 lines - capacity of 707,000 TEUs), Indonesia (4 lines - 137,800 TEUs), Thailand (1 line - 137,800 TEUs), Malaysia (1 line - 12,800 TEUs), Vietnam (1 line - 9,100 TEUs), and the Philippines (1 line - 8,700 TEUs). The harshness of the market is evident through the disappearance of two brands after struggling with financial difficulties in the previous decades: NOL/APL (Singapore), which was once ranked 5th in the world, and MISC (Malaysia), a member of the Grand Alliance since 1998.

The three Singaporean shipping lines in the top 20 include PIL (ranked 12th), X-PRESS Feeders (ranked 13th), and SeaLead (ranked 18th). PIL is the only member of the top 12 that does not operate any transcontinental routes on the East-West axis, mainly focusing on routes connecting Africa, Latin America, and intra-Asia. X-PRESS Feeders is the world's largest feeder carrier, with a unique model of not owning containers and serving the feeder needs of other shipping lines. Established in 2017, SeaLead has experienced rapid development. Similar to CULines (China), SeaLead took advantage of the high demand for transportation during the 2021-2022 period to develop routes between Asia and Europe or across the Pacific, but these routes were discontinued early. RCL (Thailand) is a long-standing shipping line established in 1979 and remains stable in the top 30, but its operations are mainly confined to Asia.

The trend of monopolization by the top group in the shipping market has a significant impact on the port and fleet strategies in countries dependent on maritime transport like Vietnam. It necessitates the consolidation of port operations into a few strong companies, as spreading too thin would risk losing the advantage in cargo sources against powerful shipping lines. Developing container fleets for distant markets in Europe or the Americas is entirely impractical due to barriers related to capital, operational networks, services, and market access. The practical opportunities lie primarily in bulk carriers with operational flexibility and in domestic container routes or nearby feeder routes.





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