Alix Partners : It is "Very Difficult" to Make Money in Box Market

by Ship & Bunker News Team
Thursday May 14, 2015

Consultants Alix Partners last month said box shippers will find it difficult to turn a profit going forward, CNBC reports.

"It is a very difficult industry to continue to make money in," said Albert Stein, a Managing Director at Alix Partners.

"Containers are getting cheaper, for better or for worse - worse for the container lines and better for the end users."

According to the report, aggregate revenues for the 15 largest publicly traded container shipping companies were 16 percent down last year compared to a 2008 peak of $200 billion.

But lower revenue is only one issue facing the industry, said Stein.

Profits recently reported by box carriers are not sustainable as they are are not enough to support adequate investment, he said.

"We see a problem where the industry itself does not make enough money to reinvest in the tonnage it needs going forward."

In addition, while big players may currently be able to invest, small players cannot.

"Every time you see a container line buying a new vessel, building new capacity on a route, you see somebody else suffering, the smaller segment dropping off," said Stein.

In March Alix Partners released its 2015 Container Shipping Outlook report, which said that the benefit reaped by box shippers from lower bunker costs are not enough to fund required investments.

Earlier this year Hapag-Lloyd CEO Habben Janssen said "it always surprises me, that there are so many companies struggling with an industry that grows 3-4 percent every year."

Ship & Bunker News Team
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