Six out of the top 10 carriers have now sought state aid since the start of the coronavirus pandemic

News yesterday that Pacific International Lines (PIL) is seeking a de facto state bailout has brought into sharp focus the financial viability of the container shipping industry as a whole, having made paltry profits for a decade and now faced with a historic drop in demand thanks to Covid-19.

Singapore-based PIL revealed on Tuesday that Heliconia Capital Management, part of Temasek Holdings, the world’s eighth largest sovereign wealth fund, is looking at making a major investment into the containerline.

PIL also warned of the risk of defaulting yesterday. PIL has received loans from Temasek Holdings before. Back in 2018 another Temasek unit, SeaTown Holdings, stumped up cash to help the beleaguered line.

Alphaliner reported in its latest weekly report that eight out of the 12 largest containerlines have received financial support from their governments, or have direct state ownership interests.

“Government support has propped up less efficient carriers, hindering much needed market reform. As such, the state aid has prolonged capacity in the container shipping market,” Alphaliner maintained.

Commenting on the PIL news via LinkedIn, Lars Jensen from SeaIntelligence Consulting, pointed out that PIL is the sixth out of the top 10 carriers to overtly seek government support in the wake of the pandemic this year.

“This means that since the virus outbreak started in January we have now – overtly at least – seen 6 of the world’s 10 largest carriers looking to get state-aid: CMA-CGM, COSCO, HMM, Evergreen, Yangming, PIL. These 6 carriers account for 43% of the capacity operated by the top-10 carriers,” Jensen wrote.