CMA CGM teamed up earlier this year with China Shipping Container Lines Co. and Middle East shipping major United Arab Shipping Co. to share vessels and port facilities on some of the world’s largest trade loops.
The high cost of buying giant new container ships, coupled with fierce competition to fill them, has kicked off a round of consolidation in the shipping industry that is likely to continue, said a senior executive of French container shipping major CMA CGM SA.
“On the main trades between Asia and Europe (and) Asia and the U.S., there will be more consolidation, as these loops will increasingly be serviced by very large vessels that can carry up to 20,000 containers,” CMA CGM Group Executive Officer Farid Salem said in an interview. “It isn’t easy for a smaller operator to either buy or fill such ships.” A so-called Triple E ship that carries up to 20,000 containers costs in excess of $160 million.
Container shipping, which carries around 95% of the world’s manufactured goods, has suffered for the past decade from overcapacity, which has led to falling freight rates. Analysts estimate global containership overcapacity at about 15%.