UNCTAD (PART II) World consolidation continues
Fewer countries and companies own more and more
The UNCTAD review shows just how much the industry and the maritime world have changed over the last five years. The industry trend of consolidation and trimming excess fat shows up in unexpected corners. The average number of shipping companies in each country has shrunk by almost 30 percent in the last 10 years from 22 to 16.
There has been a significant change in the pattern of cargo flows through developing countries. They now account for about 60 percent of global goods traffic (inbound and outbound) – in 2000 they contributed only 40 percent of inbound goods.
“For the first time ever the share of goods unloaded in developing countries is likely soon to surpass their share of goods loaded. some analysts are predicting that the value of world merchandise trade will more than double between 2010 and 2020 and that China’s exports to Europe will be valued at almost twice those of the United States’ exports to Europe (Ernst and Young, 2011). They are also expecting that intraregional Asian trade will grow rapidly to reach $5 trillion and that Europe’s exports to Africa and Western Asia will be around 50 per cent larger than its exports to the United States.”
The forecast is that the value of world trade in goods will more than double in the 10 years to 2020. The value of China’s traffic to Europe will be almost double that of US exports to Europe while Europe’s exports to Africa and Western Asia will be 50 percent more than its exports to the US.
Some predictions say that the value of world merchandise trade will more than double between 2010 and 2020 and that China’s exports to Europe will be valued at almost twice those of the United States’ exports to Europe . They are also expecting that intraregional Asian trade will grow rapidly to reach $5 trillion and that Europe’s exports to Africa and Western Asia will be around 50 per cent larger than its exports to the United States.
Newbuildings overcapacity is fully borne out. “Only in 2012, for the first time since 2001, was the fleet that entered into service during the year less than that delivered during the previous 12 months.
“In spite of this slowing down of new deliveries, the world tonnage continued to grow in 2012, albeit at a slower pace than in 2011. The world fleet has more than doubled since 2001, reaching 1.63 billion deadweight tons in January 2013,” says UNCTAD.
Ownership and financing of fleets are following the trend of fewer owners and operators controlling more vessels, while private equity is becoming more common. Owners from five countries – in order of decreasing tonnage, Greece, Japan, China, Germany and Korea – together account for 53 per cent of the world tonnage. Predictably, China owns the most vessels, 5300, of which half are foreign flagged – but the number under the Chinese flag is still more than Greece, Germany and Japan combined. The survey uses Clarkson figures to show that Japan’s fleet has the highest value, $100 billion, followed by the US at $90 billion.
Private equity funds financed 22 shipping transactions in 2011 and 2012, totaling $6.4 billion
In 2012, it was estimated that about $65 billion in new debt and equity alone were needed to cover orders of new ships, as well as sales and purchases of existing vessels. In 2013 and 2014, the gap will be $101 billion and $83 billion, respectively “However, it must also be kept in mind that private equity funds are temporary investors whose overall objective is to sell or float their investments once the market rebounds. While their investment horizon is typically between three and seven years, they would wish to be able to make their own decision at any time as to the exit period in order to maximize profits.”
A slightly depressing, though accurate, assessment.