in the container business. Mostly because governments inter veined.
Let's see what happens in the next year.
Some people think there will be some..
From The Journal of Commerce
Lazard's Stokes says carriers are looking to cuts costs, expand market share
Further consolidation of container shipping lines is likely as carriers seek to cut costs, expand market share and bolster balance sheets, said Peter Stokes, senior analyst and head of shipping at investment bank Lazard.
“I believe that we will finally see a number of non-cash defensive mergers as companies struggle to remain competitive on the major east-west routes or seek to strengthen their position in north-south and intra-regional trades,” Stokes told the Marine Money conference in New York.
Container shipping survived 2009’s market slump, which produced more than $15 billion in losses, without major failures or consolidation. Stokes said, however, that container shipping and certain specialized sectors of shipping may be better candidates for mergers and acquisitions than commoditized bulk shipping companies.
“This is because these are businesses which are much more complex to operate, where greater synergies can be realized and where factors such as market share and long-term customer relationships can be a significant part of value,” Stokes said. “In the current, desperately poor, container shipping market, the arguments for consolidation for purely defensive reasons are hard to refute."
He said that mergers of large container ship lines during the last 15 years have been difficult to pull off but have shaved about 3 percent off the merged companies’ operating costs. “Cost savings alone … provide a compelling case for consolidation,” Stokes said.
Mergers and acquisitions also increase market share and can provide balance sheets with the “size and strength… to support the continued heavy investment needed in the next generation of larger and more fuel-efficient container ships.”
Stokes acknowledged that some mergers of recent years, such as the 1996 union of P&O Containers and Royal Nedlloyd, and A.P. Moller-Maersk’s 2005 acquisition of P&O Nedlloyd, proved more problematic than expected.
But he said the overall experience supports the case for further consolidation of container shipping. Maersk’s purchase of P&O Nedlloyd solidified the Danish company’s dominance in container shipping, and that the acquisitions by Hapag-Lloyd of CP Ships and by Neptune Orient Lines of APL eventually produced benefits that outweighed initial difficulties.
“In all of those cases… the immediate post-deal experience for the acquirers was difficult. And yet, all three companies have survived, and all three would say they are in a better strategic position now than they would have been had they not made those acquisitions.”