Shipping line mergers attract limited positive response

THERE APPEARS to be little enthusiasm from the industry regarding the proposed merger of AP Moller - Maersk and P&O Nedlloyd. Reader responses to two polls run on FTNow, FTW’s sister publication on the internet, reveal that 17% of respondents believe it’s good news for carriers, 74% believe it’s bad news, and 10% are unsure. The shipper perspective is a little more positive with 24% stating that it’s good news for shippers, 52% that it’s bad and 24% unsure. We invited readers to send their comments by email, and the following input from two freight forwarders represents the views of the majority of our readers: ‘Only benefits shipping line’ I perceive this to be of benefit to the shipping line only. There is no advantage to the shippers and consignees and I am totally against this. This move smacks of monopolistic intentions and is a slap in the face for the free market system. ‘Mergers remove competitive edge’ The shipping lines carry an enormous amount of power in terms of decision making on behalf of the importers and exporters who may or may not utilise their service around the world regardless of their input, needs and specific requirements. South Africa is especially limited to good carriers that can deliver a consistently reliable service, and therefore mergers of this size are not always beneficial to our customers (the importer and exporter) in terms of both negotiating cost and service. The freight forwarder is limited too, when it comes to making that choice on behalf of the client in terms of both service and cost – and therefore mergers of this nature remove the element of competitiveness which is vital in the industry, and that always starts with the actual carrier. The result is that when a merger of shipping lines as in this case takes place, they carry the monopoly of their sector of the market, and will control price regardless of service levels. The importer and exporter and the forwarder will have no option but to utilise their services and end up paying more than what is really acceptable. Bottom line - the more players there are, the better the competition and therefore the benefit of choice for the best price and best service to the end user. Mergers remove the competitive edge.