“I believe we are very close to a tipping point in liner shipping,” he said in a presentation entitled Container Shipping —what’s next?
The head of the world’s seventh largest liner shipping company, listed the slowdown in global trade growth; high fuel prices; new vessel technologies; concentration of industry players; and the need for high capex budgets to compete and the absence of available financing, as the factors driving change.
Growth in container trade had plateaued in 2007-2008, Glenn said. Slower growth in the 5%-6% range should now be expected rather than 9%-10% experienced in the 1990s and 2000s.
“There is not another China,” he said, “The main growth in the future will not be in the major line haul trades.”
On consolidation, Glenn said this was happening, especially at a trade level.
“The leading three players on the Asia-Europe trade now control 50% of the market, compared with 20% in 2000, and there is, therefore, some price leadership.”
Glenn anticipates that the high capital costs of the liner shipping industry will now “become a barrier to entry” for many companies while forcing a realignment within the industry, leading to fewer players.
“You need to invest $1.2bn-1.5bn to build a series of ships for an Asia-Europe service and you need five-six strings to compete,” he said. That is a huge commitment.”
To survive the "tipping point", Glenn said, carriers needed to focus more on their network strategies, reduce their cost base, change traditional pricing paradigms, better understand their customers’ priorities and generate shareholder value.
Singapore-headquartered APL is doing this partly through its biggest ship modernisation programme ever, with 34 vessels, including 14,000teu-plus super generation post-panamax tonnage, on order.