Purchase or Perish: Finding a Yenta in the Liner Business

by Nicolai Heidenreich

Consolidation in the container industry is not newsworthy; however, we believe that consolidation will take the form of mergers and acquisitions rather than strategic alliances and pooling arrangements in the next 18 months. In the following analysis, we will demonstrate why consolidation will accelerate, why alliances are often not good alternatives for stronger players, and why we think mergers and acquisitions will dominate the consolidation landscape going forward. In the end, we will argue that liners, commonly thought to be above the vagaries of the asset play, can learn a very valuable lesson from their swashbuckling cousins in bulk sectors.

A volatile cocktail of immense debt, intense competition and the erosion of margins, coupled with a lack of strategy and yield management, will result in many smaller companies going bankrupt over the next two years. In short, we view Maersk’s acquisition of Safmarine to capture roughly 40% of the container transportation trade between Europe and South Africa, as the tip of the iceberg.

This is only an excerpt of Purchase or Perish: Finding a Yenta in the Liner Business

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