The future direction of the container shipping industry

The container shipping industry is experiencing an unprecedented boom in revenues and profit due to…

The container shipping industry is experiencing an unprecedented boom in revenues and profit due to the corona pandemic supply chain impacts. The question is now for the carriers how they should deploy the huge cash flow generated over time to maximize shareholder return. 

Traditionally, the industry has reinvested into new vessels, which has led to oversupply of tonnage. However, this time, it appears the carriers have been prudent and not overinvested in new capacity. Most of the new tonnage on the order book is scheduled for delivery in 2023 onwards. A lot of carriers are instead giving the money back to shareholders through dividends and share buy-back programs. 

Normalization of supply and demand is expected somewhere between 6-18 month from now, but nobody really knows when it will happen. The current backlogs in US and China ports have not improved significantly over the recent months. So who will be the winners in the industry ? 

Currently everyone seems to be riding high, however the ones with the right growth strategy will come out on top. The answer lies within a couple of key areas. 

The journey towards success for the container shipping carriers starts with strategic clarity : 

–       Where and how do we want to play ?  e.g.

o   Do we want to be the most efficient port to port operator ? 

o   Do we want to be a full service container shipping line offering door to door services ? 

o   Do we want to be an Integrated supply chain services provider ? 

–       What are the strategic capabilities we need to win in the market ? 

–       What will be our focused business model and a precisely targeted value proposition ?

–       How do we differentiate ourself from our competitors ? 

–       How do we obtain cost leadership from our network ? 

–       Which services and products do we need to offer and how should tonnage be deployed ?  

–       Which customers do we want to serve ? 

–       How do we grow our most profitable customers ? 

–       How do we deploy the latest state of the art technology so we have access to the best advanced business intelligence enabling us to make the right decisions ? 

The winners will be the carriers that are truly customer focused and change their business model to accommodate for the changing customer needs. 

It will be incredibly interesting to see how the container shipping industry develops over the next 18 months given their current levels of profitability and vital importance for worlds supply of goods. 

If you need help with your strategy please give me a call on +45 25310591 or email me on [email protected]

https://www.linkedin.com/pulse/future-direction-container-shipping-industry-henrik-anker-olesen