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Box shipping consolidation will have little impact on rates: Widdows

source:seanews author: time:2014-04-14  

RON Widdows, chief executive of the Rickmers Group and former CEO of Singapore-based APL, has criticised the shipping industry for not consolidating earlier, but today finds it hard to believe it would do much to control pricing.

Speaking at the Trans-Pacific Maritime conference in Long Beach this week, Mr Widdows saw little scope for consolidation in the container shipping market despite merger negotiations between Hapag-Lloyd and CSAV.

If the pair combine forces, it might improve their cost structure and scale benefits, but will not have any impact on the pricing environment in container shipping, he said, reported Lloyd's List.

"You would have thought when the industry lost US$20 billion in 2009, that's when consolidation would have happened, but it did not," he said.

Today, Mr Widdows believes that one of the big challenges to overcome is non-compensatory pricing.

"It's a strange thing, this lack of willingness to lose a customer-everyone has basically the same customer year after year," he said, referring to frequent freight rate wars as each shipping line protects accounts from competitors by offering cheaper rates.

One move that could bring greater stability to the container shipping trades is increased cooperation in the form of the proposed new super-alliances-P3, the expanded Grand Alliance and CKYHE-when it comes to future ship investments.

"You have to hope that expanded alliance relationships will trigger an opportunity for these guys to co-operate on how they procure assets. do it collectively so that you don't add capacity to the marketplace," he said.

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