AlixPartners survey

Cutting Costs Key to Container Lines' Survival

While there was a slight rise in rates at the end of last year after the Hanjin Shipping collapse, this was not sustained and lines will have to make hard financial decisions this year to ensure their survival.

News ID: 72876

Date: 08 March 2017 - 15:41

According to MANA, these were the findings of the latest AlixPartners Annual Container Shipping Study that warned the outlook for global container carriers remains rocky at the outset of 2017.

AlixPartners cautioned that Brexit and the new US administration’s policies threaten to inject further uncertainty into the future of global trade and that these protectionist stances could reverse policies that have supported the growth of containerization since the 1950s.

“The industry remains in the midst of major upheaval it’s experienced since the 2008 financial crisis. Carriers need to remain focused on eliminating costs from their core shipping business,” said AlixPartners md Esben Christensen.

“While there has been good news recently in rates, the industry still needs to be prepared for continued struggles. The recent consolidation isn’t the cure all for the industry.” Going into the key transpacific rates period, companies need to do everything they can to retain the higher rates recently seen, the report noted.

The study shows lines have cut operating and capital expenditures by more than half to $12.4bn in 2016 from $25.2bn in 2011.

"Carriers will have to make some hard decisions in 2017. They’ve already taken steps to relieve their financial woes, including slashing expenditures. They must continue to drive down costs through effective post-merger integration and fleet rationalization to bring supply and demand into balance," AlixPartners said.