Report Sees Route to Profits for Container Carriers

BCG says container carriers must change course to restore profitability.

Container carriers can achieve profitability despite the current weak shipping market through strategy, discipline, and focus on infrastructure and IT assets, according to a new report by management consulting firm The Boston Consulting Group (BCG).

The report argues that problems in the container-shipping industry in 2011 and 2012 have been due to a supply and demand imbalance, and price wars that followed.

Now container carriers "must change course to restore profitability."

"Carriers should not be willing to accept the volatile financial performance they have experienced in recent years," said Ulrik Sanders, a BCG senior partner.

"Although it's true that carriers are exposed to market forces that make profitability hard to sustain, they can overcome these challenges by bringing the right mix of discipline and diligence to each aspect of the business."

To succeed, BCG argues, carriers must build up key infrastructure assets, establish alliances and pursue mergers and acquisitions, monetise all service offerings, manage costs to increase efficiency, and use data collection technology to optimise their strategies.

"The industry must find ways to make money in periods of excess supply by exercising all options to achieve capacity discipline," said BCG partner Lars Fæste.

"These actions include not only slow steaming, idling vessels, and scrapping tonnage but also intelligently pricing services."

A.P. Moller-Maersk (Maersk) recently announced that it is shifting its focus away from its container shipping business in the face of the difficult market.