The New Trends in Global Shipping Industry

II. THE NEW TRENDS IN GLOBAL SHIPPING INDUSTRY

1. Consolidation - Mergers and Acquisition (M&As)

Consolidation in shipping is one of the major trends which have been predicted and stated by many maritime researchers and experts. Grammenos (2002) claims that M&As have been an important phenomenon in modern economic life, which promotes stable growth, expands market share/ new market and allows carriers to build scale to broaden their global coverage as well as to reduce costs by leveraging synergies. In the past, there were significant consolidations took place in the container shipping industry: the acquisition of Sealand by A.P.Moller-Maersk Line would culminate in benefits including rationalization of operation and cost reductions from bringing together administration, marketing and information technology; or the mergers of P&O Containers and Royal Nedlloyd Line in 1997 aiming to improve the container service performance of both companies etc.

As the statistic of UNDTAC (2010), the 2008-2009 crisis brought serious influences on the whole shipping industry, although all shipping companies have incurred heavy losses because of economic recession, oversupply capacity and low freight, there have been no mergers or acquisitions among them since the crisis. However the losses currently being incurred are unsustainable and there is probably no way around further industry consolidation in long run.

The point of view was re-stated by executives at the Sea Asian Conference in Singapore (12-14 April 2011). Thomas Knudsen-MAERSK's Asia-Pacific CEO said: "We see consolidation happening. Large carriers will acquire smaller carriers as the latter would go out of business due to difficulty in getting financing". Kenichi Kuroya, president and CEO of K line, also stated that "there will be some consolidation".

2. Environmental safety and standards

The issue of environmental safety and standards is more and more important in maritime discussions and conferences of the International Maritime Organization (IMO). According to UNDTAC (2010), The United Nations Climate Change Conference in December 2009 came to a conclusion having taken no specific decision regarding shipping, IMO will continues its best attempt the main issues under consideration, specifically: the mandatory application of technical measures developed by IMO's Marine Environment Protection Committee (MEPC), and the adoption of market based measures such as imposing a levy or tax on ship bunker fuel, and emissions trading.

Eivind Kolding, Maersk Line CEO, announced that Maersk has already addressed their leading role in protecting environment by attempt to reduce CO2 emissions by 9.0 percent in 2008 which led to a saving of $500 million through slow steaming, slippery hull coating, better propellers and other efficiency measures. Furthermore, the company has also set up the goal to reduce emissions by 50% by 2020, and by 70% by 2030. He believes that it is not only bringing benefit for the company but also meeting the demand of customers who depend on carriers in the supply chain and base their purchasing decisions on this type of information.

3. Development in Asia and Pacific

Another trend which is recognized is that the development in Asia-Pacific region will continue to play a leading role in global maritime sector. Eng Aik Meng (2011), president of APL, argued that intra Asia more finished goods were being moved to meet consumer's demand rather than just raw material. He asserted that the interest for main lines in Asian market was no longer so much weighted to exports to Western nations but would trade between the Asian countries and regions because now consumer spending power in the region was much higher and there would be an increase in short sea area, the vessels on these service had also got larger to meet growing demand with more frequent services.

The point of view is also shared by Ma (2010) that there is changing economic structure in many industrialized countries, resources are being shifted from heavy, dirty industries to light clean high value added and technology intensive industries, more and more industrial activities and the processing of raw materials are taking place in the countries