German shipping companies expect industry shakedown | Business| Economy and finance news from a German perspective | DW | 20.06.2013
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German shipping companies expect industry shakedown

Surging overcapacity amid weaker global trade is raising the fears among German shipping operators of a big market consolidation, a survey has found. The German captains of the industry seek a lifeline in new alliances.

About half of all German shipping companies are seeking to form alliances with competitors, while some 40 percent are already working together with their rivals on specific routes, a survey released by consultancy group PwC said Thursday.

"Closer cooperation is the result of shipping overcapacity, slumping freight prices and dwindling revenues," PwC shipping analyst Claus Brandt told a news conference in Hamburg.

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The survey, which gauged opinions of 100 shipping executives, said that about 90 percent of the CEO's surveyed expected a rising number of insolvencies in the sector this year. In addition, German shippers saw an ongoing need for mergers and acquisitions as they didn't expect the market to improve in the foreseeable future.

According to the PwC study, capacity utilization in the German commercial shipping fleet slumped from about 86 percent in 2011 to just 70 percent in 2012. Moreover, a huge number of new and bigger ships, ordered in booming trade times two years ago, would be hitting the market this year, further reducing freight tariffs. In addition, credit was drying up as banks were cutting back on investments in ship-building due to the crisis.

"Adverse market conditions coupled with tougher funding requirements will cause the German commercial shipping fleet to diminish," the PwC study said, noting that 58 percent of the executives polled were weighing fleet reductions, compared with 43 percent in 2012.

On Tuesday, the world's three biggest shipping companies announced an alliance on three important routes in a strategy to face overcapacity and declining transportation demand. CMA CGM of France, Maersk Line of Denmark and Swiss MSC said the cooperation would offer more shipping options to customers through better utilization of vessel capacity.

uhe/dr (AFP, dpa)

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