General

Only 16 companies control 80% of the world's liner shipping, container production and container leasing capacity!

u3000u3000 Oligopoly|The extreme integration of transporters, container production and leasing is a pain point in the supply chain

u3000u3000 The United States has never paid more attention to global container transportation than it is now. However, ships and containers in this industry are not under the control of the United States, but are concentrated in the hands of a very small number of non-US companies. These companies continue to expand their market share and become bigger and bigger like a snowball.

u3000u3000Olivier Ghesquiere, CEO of Textainer (NYSE: TGH), a container equipment leasing company, summarized the situation during the company's quarterly conference call. "The question we often encounter is: How long will this last? In my opinion, it can only be solved in two ways: Either consumer demand drops a bit, or infrastructure investment is increased."

u3000u3000 There is no motivation to change

u3000u3000 Three main decision-making links control the pricing and availability of ships and containers:

u3000u3000 Shipping company: provide freight and purchase and lease ships and containers;

u3000u3000Container equipment lessor: order new boxes and provide rental rates;

u3000u3000Container Factory: Provide the price of newly constructed boxes.

u3000u3000 Only a few companies control each of these three links. The current market situation is very profitable, eliminating the incentive to compete more on prices.

u3000u3000 According to Alphaliner's data, the top eight liner companies now control 81% of the world's capacity. Ghesquiere pointed out that the prices obtained by shipping companies are very high, and there are still a lot of goods waiting to be transported in Asia, so shipping companies are indeed at an absolute advantage and do not need to change the current price behavior environment. "

u3000u3000 Container equipment factory is the same, almost all of the factories are in China. After the recent integration, this model reappeared in the container equipment leasing sector, with the top three Chinese builders producing 83% of all new boxes.

u3000u3000 Ghesquiere said: "They get high prices for containers, and they maintain high pricing levels while making huge profits. Therefore, manufacturing prices are unlikely to fall. They have no incentive to change."

u3000u3000 Adding up all the participants, there are only 16 companies in total: 8 liner companies, 3 factory groups and 5 container lessors. Control over 80% of container ship capacity, container production capacity and container leasing capacity. If the high pricing continues, the shareholders of each of these 16 companies will continue to receive substantial financial benefits.

u3000u3000 ocean carrier merger

u3000u3000Ocean carriers have been busy placing orders, either directly through their own accounts or through charter boats ordered by a ship leasing company. Since last year, orders have more than doubled, but new ships will not be launched until 2023-24, which will not help American importers in 2022.

u3000u3000 With the construction of new ships, liner companies are acquiring second-hand tonnage to further consolidate the market.

According to Alphaliner, the top eight liners are Maersk (Denmark), MSC (Switzerland), CMA CGM (France), COSCO (China), Hapag-Lloyd (Germany), ONE (Japan), Evergreen (Taiwan) And HMM (South Korea).

u3000u3000 Five months ago, these eight companies had a capacity of 19.7 million 20-foot equivalent units. Since June, they have increased the capacity of 435,236 TEUs, bringing their combined fleet to 20.1 million TEUs and a market share of 81.1%.

The net income since June has been driven entirely by the increase in its own tonnage, rather than new charters (the chartering market is basically sold out). MSC is currently the first to take the lead because it has purchased an unprecedented number of second-hand ships of.

u3000u3000 The largest liner company will further increase its market dominance when delivering new ships in 2023-24, provided that the delivery will not be offset by lease expiration and scrapping of old tonnage.