Consolidation on the horizon for intra-Asia

9/17/2012

Lars Jensen, CEO and partner of Copenhagen-based research and consultancy group SeaIntel Maritime Analysis, believes that consolidation and larger ships are on the horizon for the hugely diverse and fragmented intra-Asia trade.
Speaking at the Global Liner Shipping Asia conference in Singapore this week, the liner shipping analyst, referred to the intra-Asia market as being “picture-perfect of complete fragmentation”.

He added: “The sheer scale of fragmentation is staggering, and even in our analysis, which ignored ships of below 500teu and barges on the Pearl and Yangtze rivers, we identified 68 carriers deploying 1,500 ships on 10,000 or so trade combinations.”

In terms of service strings, Jensen’s research revealed even more fragmentation. He said that shippers/consignees had access to 98 sailings a week between North China and Japan/South Korea and over 70 links a week on corridors linking South China with South East Asia.

Jensen suggested that this high level of connectivity was one advantage of the trade’s fragmentation.

He estimated that annualised capacity deployed was a massive 72 million teu, and while he did not give a figure for cargo flows, other analysts have suggested intra-regional exchanges in the 50-55 million teu range.

But he believes changes are afoot in the markets structure, as cargo growth rates slow, larger ships are cascaded into the market and regional shippers/consignees requirements change.

A clear message was that intra-Asia trades are not decoupled from what is going on elsewhere.

“With the workhorse of the Asia-Europe trade rising from 8,500teu to 13,500teu, the feeder requirements in Asia will be significantly impacted,” said Jensen. 

“One force will be to pull the sector to the use of larger vessels to provide further economies and another force will be a pull towards higher levels of sailing frequency.”