Monday, August 15, 2016

Shipping: $50 Billion 'Black Hole' Leaves Container Business Ripe For M & A

From Splash 24/7:
Container industry revenues are contracting faster than carriers can cut costs, Drewry warns in a new report. First-half results so far suggest sales are down by around 18%, increasing the pressure to reduce costs.

“The container shipping industry is currently enduring a severe revenue contraction that is placing carriers under enormous pressure to squeeze more savings wherever they can and is driving the latest round of M&A activity,” the UK-headquarted consultant noted, describing first half results so far reported as “very depressing”.

Carriers are on course to post full year combined revenues some $29bn less than in 2015 – marking a worse performance than the previous nadir, 2009.

Drewry predicts container lines will lose $5bn this year.

“With carriers waving goodbye to likely more than $50 billion of sales in two years since 2014 – in 2009 the sales reduction was about $66bn in just one year – it should be no surprise that most of the big players are losing money and that some are close to the financial abyss....MORE