2016 – A Year of Consolidation?
2016 has seen a continuation of a tough shipping industry particularly in the container market. From bankruptcy to newbuilds and everything in between, the common theme has been uncertainty.
Indeed the announcement from Hanjin in the latter part of this year came by surprise to many despite rising debt and depressed rates. Apart from the obvious disruption in global trade, many focused on the ships themselves and the crew on board now effectively marooned a mile or so from port with no idea when or if they would get paid. What will happen to the tonnage? Is there any hope of the debt being recovered over the next few years? We can safely assume that it won’t be put to rest quickly.
Safety in numbers? Mergers & Acquisitions have certainly been a prominent theme in 2016. The most prominent of which came from CMA CGM acquiring NOL (Neptune Orient Line) and Maersk Line putting pen to paper for a deal for Hamburg Süd. At least 5 of the top 10 largest owners have announced M&A’s this year alone which; speaks for itself in terms of how the leadership of the industry feel about the outlook going forward into the third decade of the 21st century. Not only have owners been merging but also ship management companies around the globe have found they can compete better for business with a higher volume of ships. After the merger between Anglo-Eastern Ship Management and Univan in late 2015 a flurry of activity has ensued with the sales of Bibby Ship Management to V. Group and talks between Marlow and Columbia Ship Management growing in momentum. In a year with such drastic business, is consolidation the only way to survive the current economic climate in the maritime world? Or is consolidation just a temporary patch to buy time? Are smaller companies going to be able to compete against such heavy weight competition?
On a positive note these events mean increased stability in the short term as well as a more positive attitude in the market going forward into 2017. As recruiters within the shipping industry we are a crude ‘yard stick’ as to how the industry is doing. If we are busy and rates are high then times are good, if business is scarce and the budget for recruitment has been slashed then it is obvious that a more strategic plan is in place for the future. For consultants the most frustrating thing is that despite our services still being essential to keeping the industry going, recruitment spend is usually the first to be slashed from the budget.
WRS Tech is a full service independent Technical Consultancy who resource, recruit and retain technical professionals to four core sectors; Offshore Technology, Marine, Shipping and Ship Building. Our Divisions are often the markets choice for providing permanent and contract technical staff, due to our specific industry knowledge and our commitment to providing a fruitful, transparent and ultimately useful service.
Maritime Specialist - Shore Based Consultant at WRS Tech Ltd.
+44(0)23 92 633 952