South Korea’s 14 container carriers coming together on intra-Asia trades will not be enough for them to compete in today’s massively consolidated liner sector, analysts at Alphaliner claimed today.
Just ahead of the first anniversary since Hanjin Shipping sought bankruptcy protection, South Korea’s remaining 14 container carriers last week announced they are teaming up on the intra-Asia trades.
The Korea Shipping Partnership (KSP) features every single Korean container carrier, including Hyundai Merchant Marine (HMM) and new name SM Line.
Under the terms of agreement, they will cooperate to improve their collective strength through various measures including increasing shared cargo capacity, adding new shipping routes and co-managing overseas terminals.
The KSP however does not go far enough, Alphaliner maintained today.
“The Korean carriers’ disadvantages from (lack of) scale and from excessive competition in their common markets can only be overcome by full fledged consolidation – similarly to the recent and ongoing efforts of the major Chinese (COSCO and CSCL) and Japanese (NYK, MOL and K Line) container lines. Such a far-reaching move, however, appears to be remote in the Korean context,” Alphaliner stated in its latest weekly report, adding: “The Korean carriers are expected to remain disadvantaged due to their fragmentation and lack of scale, with a combined share of less than 20% on the intra – Far East route and less than 9% of the Far East – ISC/ME route.”