Transportation & Logistics Analysis

SHIPPING SERIES 2019-2029 Scenario 2: The overlapping nationalists

August 14 2019

For this second episode that takes a look forward to the configuration of the future Liner market for the period 2019-2029, we will imagine that the Consortia block exemption will not be renewed on April 1st, 2020.

We will also make the following assumptions, firstly that the nationalist politics around the world will be reinforced at a similar rate to that which we have observed over the last 10 years but also that the United Kingdom has temporarily left the European Union (which, despite this, didn’t explode partly due to a strong Euro but also the arrival of Scotland and a United Ireland.)

Powerful forces dominate international exchanges (China, the US and Russia) exactly as we see them today, if not even more so.

This is the scenario where everyone “cashes in their chips”, each country or union decides to limit the access to their domestic market according to “national or union preference” agreements. At the same time the maritime alliances such as we know them today are all reconfigured into national poles or supranational poles organized into large geographical zones.

If this comes to pass what will be the new blocs that logically emerge?

1/ Asia Pacific Zone, with China at its centre.

A single gigantic state-owned operator, COSCO along with the "forced" integration of Taiwan (EVERGREEN and YANG MING LINE) after having bled Hong Kong dry. Extensive agreements with Russia in the form of Shipping Join Ventures, an integration of CMA with the exception of services to French Overseas Territories that will return to being the prerogative of the French state in accordance with their policy of territorial continuity.

By 2029 the projected strength of this bloc will represent around 31% of the available supply of TEU capacity.

2/ Asia Zone, with Japan at its centre.

A single gigantic operator, along the lines of ONE (NYK / MOL / KLINE), which will have absorbed the "old friend" HAPAG LLOYD and HYUNDAI. South Korea has no other choice than to join forces with Japan in this period of extreme tension.

By 2029 the projected strength of this bloc will represent around 16% of the available supply of TEU capacity.


3 / Americas and Britain Zone, with North America at its centre.

A single gigantic operator resulting from the merger of MAERSK and MSC, partly controlled by the US government following the use of requisition clauses. Britain would then serve as a bridgehead in Europe for this new bloc.

By 2029 the projected strength of this bloc will represent around 34% of the available supply of TEU capacity.


4 / Europe Zone, with Continental North Europe at its centre.

Regulated access trading zone, no attachment of any European states or the EU to a strong container shipping group, as this sector has become captive and dependent on the services of the new "Big 3" mentioned above.


5 / Africa and Middle East Zone with the Middle East at its centre.

This is also a trading zone, with similarities to the European situation but with less burdensome regulations in an aim not to suffocate emerging economies.


In conclusion:

A highly concentrated market in terms of supply, with prices that have risen sharply, the emergence of a new sector of medium to small private cabotage and feeder companies (accounting for around 9% of capacity offered) providing services on short and medium distances (Intra Med, African cabotage...).

New digital operators along the lines of Amazon have capitalised on the integration process, taking advantage of overcapacity to become shipowners in their own right and as such complete their 3PL and 4PL services.

A projection that assumes that 10% of the total capacity in ten years’ time will be offered by this new type of highly digitized operator is a credible working hypothesis as their ability to raise capital is strong.

They decide to make a brutal break from the new segmentation into major political zones of influence, by reviving the innovative concept that EVERGREEN invented in the 80s of a worldwide global service by reinstating circumnavigational services, both east and westbound via Suez and Panama.

Increasingly expensive and complex access to markets acting as a hindrance to developing globalised services, along with extremely restrictive and costly environmental obligations could be used as a pretext for obtaining trading and berthing rights.

This is the scenario of a certain parochialism and a rapid return to inshoring of sourcing, both of which are produced within the same area of ​​influence under a unified authority.

This is a form of “Globalization Cold War” or enlarged "Trumpian" politics taken to their paroxysm.

The very idea sends shivers down the spine, but let's remind ourselves, dear readers, that this is a stylistic exercise for the summer!

You will find in Scenario 3 (the last of our saga), a more optimistic and less extreme vision of proposed projections for the next decade!

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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