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The World’s Shipping Companies Are Going Super-Sized

16th August 2017

The hulking container ships that transport sneakers, bananas and barbie dolls around the world keep getting bigger. So are the companies that own them.

A massive consolidation is underway in the $500 billion global industry and the survivors now enjoy big economies of scale and increased demand, one year after excess capacity caused the sector’s worst-ever crisis -- the bankruptcy of South Korea’s Hanjin Shipping Co.

Asia’s largest container line, China’s Cosco Shipping Holdings Co., last month said it would pay more than $6 billion for rival Orient Overseas International Ltd., owner of the world’s biggest vessel -- a carrier longer than the Empire State building. Denmark’s A.P. Moller-Maersk A/S is in the process of buying a German competitor and boasts its own fleet of mega ships, including one that can carry about 180 million iPads.

These super-sized shipping companies wield much more pricing power over manufacturers and retailers like Wal-Mart Stores Inc. and Target Corp. The five biggest container lines control about 60 percent of the global market, according to data provider Alphaliner. Shipping rates are climbing, and an index tracking cargo rates on major routes from Asia is about 22 percent higher than it was a year earlier.

 

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