The Liner Shipping Industry

For the exclusive use of M. McCaul, 2024.
W25505
THE LINER SHIPPING INDUSTRY: COMPETITION AND BUSINESS

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The liner shipping industry transported as much as 90 per cent of the world’s cross-country manufactured goods
and was fundamental to global trade, economic growth, and prosperity.2 Despite its importance, the industry
suffered from poor profitability with many firms routinely destroying shareholder value. Common explanations
were that shipping rates—the prices charged for shipping goods in containers—were too low and industry
capacity too large.
Global trade and shipments fell dramatically in mid-2020 with the COVID-19 pandemic. However, a quick
recovery in the second half of 2020 led to increased cargo volumes and the highest rates for almost two decades.
There was growing optimism that the industry was on a long-term path to sustained profitability.
Alan Murphy, chief executive officer of Sea-Intelligence ApS, believed that the industry’s long-term
overcapacity problems were in the past: “Now that carriers can tailor capacity to demand, there’s less need for
an industry buffer. That means there’s less likelihood that carriers will go out and overorder. They’re not going
to do something stupid just because freight rates are stupid.” Yet, his optimism was tempered by experience:
“This time, it does seem like carriers have learned their lesson. But if there was one thing that I would have put
money on during the past 20 years, it was carriers’ ability to grasp failure from the jaws of victory [by increasing
capacity]. They have been really good at that.”3
In late 2021, observers were unsure about the state of the industry. Was the liner shipping industry on a new path
to profitability and growth? Or would the industry’s structure and business models again lead to overcapacity
and poor profitability?
LINER SHIPPING
There were three main segments in the shipping industry. First, bulk carriers transported cargo such as coal,
wheat, oil, and gas. The second segment used specialized ships for specific cargo, such as automobiles. The third
and largest segment was liner (or container) shipping, which transported semi-finished and manufactured
products on regular schedules and routes, on ships designed to carry specialized containers.4
This document is authorized for use only by Maria McCaul in BMGT10180 Spring 2024 taught by CIARAN HEAVEY, University College Dublin (UCD) from Jan 2024 to Jul 2024.
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The liner shipping industry emerged to meet customers’ preference for shipping cargo on a regular schedule to
major ports. The industry operated on specific routes to published and fixed schedules. This replaced the previous
model of “tramp” shipping, in which ships sailed on routes where there was demand and when their cargo holds
were filled. The growth of the liner shipping model played an important role in globalizing trade and supply
chains by reducing shipping times, increasing reliability, and reducing shipment costs.
The emergence of liner shipping followed the adoption of the model of shipping cargo in standardized containers
on specialized container ships. Containers facilitated packing, storage, loading, and unloading, and they
prevented losses and damage, substantially reducing costs and improving efficiency.5 Most containers were 20
or 40 feet long (6 or 12 metres), leading to the industry standard metric of “twenty-foot container equivalents
units” (TEUs) or “forty-foot container equivalent units” (FEUs).
In 2021, the industry offered many fixed intercontinental services, with about 50 per cent involving ports in Asia.
An example of a highly fixed liner route was the “Daily Maersk” service introduced in 2011 by Maersk Line
A/S to sail between major ports in East Asia and Northern Europe. Ships on this route sailed from Ningbo in
China and picked up containers at Shanghai and Yantian (both in China) and Tanjung Pelepas (Malaysia) before
heading to Felixstowe (the United Kingdom), Bremerhaven (Germany), and Rotterdam (the Netherlands). With
a journey time of 36 days each way, the route required 70 ships for the seven sailings per week. 6 This service
increased capacity significantly between Asia and Europe and was positioned as a high-reliability service that
guaranteed delivery times in exchange for higher rates.
Smaller shipping firms focused more on short or less-busy routes (known as “transshipments”), which transferred
cargo between large ports and smaller regional ports. In this respect, the liner shipping industry mirrored the
hub-and-spoke system of the airline industry.
The liner shipping industry followed the same cyclical trends as global trade, which in turn depended on the
health of the global economy. Traditionally, container shipments grew by up to three times economic growth
rates (see Exhibit 1). However, as global trade matured, the growth rate in container volume slowed to about 3
per cent after 2020 (see Exhibit 2).1 Still, industry capacity continued to grow, and consistently exceeded demand
from the 1990s (see Exhibit 3). (See Exhibit 1 for container shipping volumes on the three major intercontinental
routes, Exhibit 2 for trends in containerized trade, and Exhibit 3 for industry demand and capacity growth.)7
Changing trade patterns posed a long-term threat to the industry. Growing concerns about disruptions to trade,
such as during the COVID-19 pandemic, led governments to push for reshoring, a strategy that aimed to bring
manufacturing back to their countries. Similarly, concerns about the length of supply chains encouraged firms
to source locally, rather than from many Asian countries. It was also thought that future global growth would be
driven less intensively by trade.8
LINER SHIPPING OPERATIONS
The liner shipping model committed firms to sail on fixed schedules and routes, irrespective of actual demand.
Ships sailed on schedule, and if they were not full, unused capacity was lost. This model converted many variable
operating costs into fixed costs, so that many of the costs of sailing a ship did not vary with the volume of cargo
carried. This created several challenges. Ships required sufficient capacity to meet demand at every port on each
route to ensure service reliability. Yet, these ships could not be so large as to sail with unused capacity. Because
costs were largely fixed, the leverage from each additional carried container was high, creating strong incentives
for firms to reduce rates to use as much capacity as possible.
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There were few constraints that limited liners from introducing new routes or sailing to ports of their choice. The
ability to move ships and capacity between routes, or to introduce new and larger ships in response to demand and
prices, increased competition in the industry. New capacity was typically deployed on the most profitable routes,
increasing the excess capacity and adding pricing pressures on those routes, which eventually lowered rates.
To achieve frequent and regular sailings between ports, all major shipping firms created alliances to coordinate
schedules and share resources. For example, the 10-year 2M Alliance formed in 2014 between Maersk and
Mediterranean Shipping Company SA (MSC) operated 185 vessels on 44 routes between Europe, Asia, and the
United States.9 Alliances reduced route duplication and allowed ships and crew, land-based equipment, and other
facilities to be coordinated and shared. These alliances were productive, as demonstrated by three alliances
among the 10 largest firms controlling about 80 per cent of global containerized shipments.10
There was limited scope for product differentiation beyond routes, timings, and pricing. Most customers were
unwilling to pay higher rates for premium services. Even the much-lauded “Daily Maersk” service was
abandoned in 2015 because customers were unwilling to pay premium rates for the flexibility of daily shipments
and because competitors introduced similar routes and schedules.11
Most liner shipping firms also joined shipping conferences, which focused primarily on setting shipping rates
and related fees. Conferences had traditionally been granted protection from anti-competition legislation because
of the importance and historical evolution of shipping. However, governments increasingly encouraged
competitive price setting, and prices set by conferences were frequently ignored. 12 Deregulation also permitted
greater freedom for shipping liners and customers to negotiate freight contracts.
In general, the shipping industry faced relatively few regulatory or government constraints. However, it was
apparent that measures would soon be introduced to control the industry’s heavy environmental impact.
INDUSTRY STRUCTURE
The industry had traditionally comprised a large number of relatively small firms. Liner shipping was less
concentrated than many industries, with the five and 10 largest firms accounting for 64.8 per cent and 82.9 per
cent market shares respectively. (See Exhibit 4 for capacity, market share, and ship orders for the 10 leading
liners and for the industry.) The concentration ratios shown in Exhibit 4 had increased by about 25 per cent over
the previous 10 years.13
Growing concentration was largely driven by mergers and acquisitions, which provided market power and
economies of scale. Large liner shipping firms enjoyed about 15 per cent savings over midsized carriers, although
these economies were often difficult to realize because of fluctuating costs.14 Predictions were for further
consolidation to reduce the number of major liner firms to as few as 10 over the next decade. 15 This could
potentially reduce excess capacity and limit competition.
The vast majority of liners’ customers were small, and each accounted for trivial shares of global shipments. Even
large multinational corporations who moved substantial volumes did not account for substantial shares. Walmart
Inc. was the largest importer into the United States in 2020, accounting for almost 900,000 TEUs. Even this was
less than 1 per cent of the total volume of global trade. Only two other firms imported more than 300,000 TEUs.16
Many customers used agents or freight forwarders, who pooled demand from multiple customers and bargained
with liners for the best rates. All leading liners offered frequent sailings on main routes, similar rates, and reliable
services. As a result, customers exhibited little loyalty, shifting their business based on prices and schedules.
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Customers were generally highly price sensitive. The importance of shipping costs varied across products but
were substantial for bulky, low-value products. For these goods, shipping costs from Asia to Europe could
account for 3 to 5 per cent of delivered costs.17 Shipping costs were proportionately lower to the point of being
immaterial for high-value items.18
The major investment for liner shipping firms was ships. The shipbuilding industry shared many characteristics
with the liner industry, being a government-supported, relatively global, mature, and high fixed-cost industry. Many
shipbuilders were part of large, well-funded industrial conglomerates, who invested heavily in ship design and
manufacturing quality. There had been substantial overcapacity in the shipbuilding industry since 2000, which
allowed liners to exert considerable pricing pressures on shipbuilders.19 Some governments viewed the shipbuilding
industry as important for national development and provided substantial support. Firms from three countries—
South Korea, China, and Japan—built more than 90 per cent of container ships.20 Competition was strong, and
prices of new ships declined, even as quality and design advances increased capacity and improved performance.21
It took about a year to build a ship, although the entire ordering and delivery process took several years. Ships were
often delivered two to three years after orders were placed.22 This created a disconnect between demand and capacity
at the time of ordering and delivery. Liners often placed orders for ships when capacity was limited and rates were
high, only to receive delivery during periods of excess capacity and low rates. The result was a recurring pattern of
increasing trade, tight capacity, rising rates, and growing profitability, followed by increased orders for ships, excess
capacity, falling rates, and declining profitability.23 (See Exhibit 5 for industry capacity and shipments.)
Containers were a sizable investment, costing more than US$3,00024 for a TEU and $4,500 for an FEU in 2021,
about double what the prices were in 2019.25 The industry owned as many as 30 million TEUs, with each being
loaded or unloaded up to 20 times each year. Many containers were shipped empty from Europe and North
America to Asia because of imbalances in demand across regions.26
Some liners attempted to provide on-shore, value-added logistics services, which were perceived to be
synergistic, high-margin services. However, liner shipping firms generally lacked the sophisticated information
systems needed to conduct complex yield management, capacity utilization, and route planning, and so they
could not offer the services customers required.27 Most liners could not determine or manage the margins or costs
per container shipped or the profitability of their different customers. By the mid-2010s, most efforts at
expanding into logistics had failed.
Many governments felt it necessary to have a national shipping line to boost trade and development; thus, they
supported the entry and operations of their flag carriers. For entrants, registration, ships, staffing, and necessary
services and approvals did not pose significant challenges, even for small firms. Ancillary services and port
services were readily available, although costs could be substantial.
In the mid-2010s, the Chinese government launched an effort to substitute Europe–Asia routes with a land bridge
to transport containers from China to Europe by rail. However, a single 11,000 TEU ship would require a train
about 77 kilometres long.28 The inflexibility of rail transport and the need to develop and coordinate extensive
infrastructure across many nations were major issues that had not been resolved.
Shipping by air was much faster, but it was restricted to cargo that was lighter and smaller. Even if feasible,
shipping by air was often prohibitively expensive, costing 12 to 16 times as much as by sea.29
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COST STRUCTURE
Most operating costs in the industry were directly or indirectly related to ship operations. Competition, pricing
pressures, the declining prices of new ships, and economies of scale led many firms to order new and larger ships.
The average size of new ships in 2020 grew to almost 10,000 TEUs, about three times larger than in 2016.30
A new class of ultra-large container ships became popular by the late-2010s. These had capacities of up to 23,000
TEUs and cost up to $150 million, 25 per cent more than the $120 million cost of 15,000 TEU ships.31 Firms
often ordered ships in bulk to obtain sizable discounts. Prices also varied by the technology employed.
Substantial improvements in design, engine technology, and automation and information technology allowed
new ships to be faster, more fuel efficient, and more reliable than older ships. These ships could operate with as
few as 15 crew members, fewer than required for older and smaller ships. Economies reduced the cost of shipping
a TEU on Europe–Asia routes by up to 25 per cent on the largest new ships, relative to ships about half their
size.32 Operators of ultra-large ships, therefore, sailed their ships on the busiest routes with the highest rates.
However, these economies could be lost if capacity was not heavily utilized. Economies of scale in ships were
also limited by additional investments to provide appropriate berths at ports and the infrastructure needed to
handle the larger volumes of cargo.33 There was a view that ultra-large container ships would not grow much
larger than about 24,000 TEUs and that future improvements would come from technological improvement
rather than larger capacities.34
Efficient new ships used between 15 and 30 per cent less fuel than smaller older ships.35 The efficiency of
container ships was further enhanced by heavy investments by ports in container handling and port management.
These advances had the effect of reducing time in ports to an average of less than a day, allowing ships to spend
more time sailing. This had the effect of increasing capacity and reducing costs. (See Exhibit 6 for a breakdown
of costs for a TEU on a representative Asia–US route.)
Port fees and handling charges were an important cost. Although some ports competed to attract large liners,
there was often only one port to use, and ports could impose fees. The failure of some developed economies to
expand their ports created capacity bottlenecks, which led to increased port fees, delays in sailing schedules, and
higher costs for liner firms. Some liner shipping firms invested heavily in acquiring or leasing their own port
terminals in an effort to control costs and port operations.
Terrorism and related concerns led to the introduction of costly screening and security procedures. Piracy was a
threat in some regions, further increasing security and insurance charges. The industry also faced growing
pressures to address environmental concerns. Liner shipping was a major source of greenhouse gas emissions.36
A number of initiatives sought to reduce emissions, introduce alternative fuels, improve energy efficiency, and
reduce the dumping of pollutants in the sea. Most observers agreed that these efforts would require heavy
investments and would increase costs substantially.37
In contrast to many costs, freight rates were resistant to increases and were often small and transient. Liners
regularly announced rate increases, but these efforts were only partly successful, with final rates typically
increasing by substantially less than announced. A key reason was that demand on specific routes or ships was
often below capacity, which encouraged discounting.
Shipping liners dealt with excess capacity by idling ships, disposing of older ships, lowering prices to increase
demand, and by “slow steaming.” Sailing at slower speeds—in some cases at speeds akin to those of sailing
ships in the nineteenth century—lengthened journey times to lower fuel consumption by 20 per cent or more.38
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As much as 10 per cent or more of shipping capacity was idled in times of excess capacity. 39 However, idled
capacity could be quickly returned to service, constraining rate increases.
Rates declined by about 2 per cent annually over the two decades from the late-1990s. (See Exhibit 7 for
representative shipment rates from 2010 to 2020.) Margins were low because most liners could not pass increased
costs to customers and had difficulty sustaining rate increases. Heavy capital requirements resulted in liners’
average return on capital being consistently and substantially below their cost of capital.40 Estimates were that
the liner shipping industry destroyed $84 billion of shareholder value between 2012 and 2016, and only broke
even in the following years.41
THE CURRENT STATE OF THE INDUSTRY
In late-2021, shipping rates on major routes surged. For example, representative rates for Europe–East Asia
quadrupled to more than $3,000 per TEU. The cost of shipping an FEU from Shanghai to New York, for example,
rose from $2,500 in 2019 to more than $15,000—an all-time high.42 This was attributed to the removal of as
much as a third of capacity on routes from Asia at the start of the COVID-19 pandemic and the shortage of
containers in Asia following the quick recovery.43
Total profits for the 10 largest liners rose significantly in 2020, exceeding their weighted average cost of capital
for the first time in many years.44 By one estimate, the industry had its most profitable quarter in the second
quarter of 2021—the most profitable since the introduction of container shipping.45 One forecast had the industry
earning $100 billion in 2021—as much as Apple Inc. earned each year.46
The surge in demand caused delays at ports because the pandemic limited the number of port workers and truck
drivers. This increased rates further, leading to customer complaints of price gouging. 47 The upheaval caused the
reliability of schedules to fall to their lowest levels for many years.
In March 2021, a large 20,000 TEU ship blocked the Suez Canal for a week, leading to more than 400 ships
queuing for the re-opening. The blockage disrupted supply chains, causing production delays in many industries,
costs to increase, and shipping rates to rise.48
There was a surge in demand for new ships in 2021. In March 2021 alone, orders were placed for 72 ships
with a total capacity of 870,000 TEUs.49 These were the largest orders in a decade and almost equalled total
orders for 2020. Together with outstanding orders, total demand for new ships was 2.9 million TEUs, with a
total of 352 ships in 2021. The vast majority of orders were for ultra-large ships that were expected to be
delivered in 2022 and 2023.50
Industry consultant Richard Greiner took a philosophical view of the prospects of the industry: “Over decades,
most markets historically rise as often as they fall. Shipping has weathered the past decade better than many
predicted, and so enters the new one [decade] all the stronger for that. If it [shipping] can meet the financial,
technological and regulatory challenges which it faces, it will continue to be attractive.”51 Greg Miller, senior editor
of American Shipping was optimistic: “The world’s container liner business is now so consolidated that it can deftly
match vessel capacity to cargo demand. This change—courtesy of mergers and alliances—is structural, not cyclical.
If liners can indefinitely calibrate capacity to cargo demand, the future . . . should be far less of a threat to liner
profits.”52 Many observers wondered, however, Was this optimism warranted and justifiable?
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EXHIBIT 1: MAJOR TRADE ROUTES AND VOLUMES (MILLION TEUs)
Transpacific Asia–Europe Transatlantic
Eastbound Westbound Eastbound Westbound Eastbound Westbound
Northern
Year Northern East Asia to North America
Europe and
East Asia to North America Total Europe and Northern Total Asia– to Northern Total
Mediterranean
North America to East Asia Transpacific Mediterranean Europe and Europe Europe and Transatlantic
to North
to East Asia Mediterranean Mediterranean
America
2014 16.2 7.0 23.2 6.3 15.5 21.8 2.8 3.9 6.7
2015 17.4 6.9 24.3 6.4 15.0 21.3 2.7 4.1 6.8
2016 18.2 7.3 25.5 6.8 15.3 22.1 2.7 4.3 7.0
2017 19.4 7.3 26.7 7.1 16.4 23.4 3.0 4.6 7.5
2018 20.8 7.4 28.2 7.0 17.3 24.3 3.1 4.9 8.0
2019 20.0 6.8 26.8 7.2 17.5 24.7 2.9 4.9 7.9
2020 18.1 7.0 25.1 6.9 16.1 23.0 2.8 4.7 7.4
Note: TEUs = twenty-foot equivalent units

Source: United Nations Conference on Trade and Development (UNCTAD), Review of Maritime Transport 2020 (New York and Geneva: United Nations, 2020).
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EXHIBIT 2: TRADE VOLUME BY TWENTY-FOOT EQUIVALENT UNITS (MILLION TEUs)
160 20
140
15
120
10
100
Million TEUs
80 5
60
0
40
-5
20
0 -10
Million TEUs Percentage Change
Note: TEUs = twenty-foot equivalent units

Source: United Nations Conference on Trade and Development (UNCTAD), “Executive Summary,” in Review of Maritime
Transport 2020 (New York and Geneva: United Nations, 2020).
EXHIBIT 3: DEMAND AND CAPACITY GROWTH
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Demand Growth %
Source: Alphaliner, Monthly Monitor, April 2020, https://www.alphaliner.com.
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EXHIBIT 4: INDUSTRY CAPACITY, MARKET SHARE, AND ORDERS
Capacity Orders
Cumulative
Rank Operator TEUs Ships Market share TEUs Ships Orders /fleet
share
1 Maersk 4,130,094 712 16.8% 16.8% 39,388 15 1.0%
2 Mediterranean Shipping (MSC) 3,921,884 590 16.0% 32.8% 635,888 34 16.2%
3 COSCO 3,009,234 499 12.3% 45.1% 276,000 12 9.2%
4 CMA CGM 3,006,290 553 12.3% 57.4% 354,024 23 11.8%
5 Hapag‐Lloyd 1,783,809 256 7.3% 64.7% 141,600 6 7.9%
6 Ocean Network 1,596,885 220 6.5% 71.2% 266,152 15 16.7%
7 Evergreen 1,330,785 200 5.4% 76.6% 703,573 74 52.9%
8 HMM 750,872 74 3.1% 79.7% 96,060 6 12.8%
9 YangMing 628,463 89 2.6% 82.2% 125,598 12 20.0%
10 ZIM 417,098 97 1.7% 83.9% 150,000 10 36.0%
Total top 10 20,575,414 3,290 83.9% 83.9% 1,921,064 177 9.3%
Next 20 1,698,785 828 6.9% 90.9% 300,840 93 1.2%
Industry total 24,515,261 6,201 100.0% 100.0%
Note: TEUs = twenty-foot equivalent unit.

Source: “Alphaliner TOP 100,” Alphaliner, April 2021, https://alphaliner.axsmarine.com/PublicTop100.
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EXHIBIT 5: INDUSTRY FLEET GROWTH AND THROUGHPUT
30 20%
25 15%
20 10%
Million TEUs
15 5%
10 0%
5 -5%
0 -10%
Million TEUs Capacity Growth % Global Throughput Growth %
Note: TEUs = twenty-foot equivalent units.

Source: Alphaliner, Monthly Monitor, January 2020, https://www.alphaliner.com.
EXHIBIT 6: COST DISTRIBUTION ON A REPRESENTATIVE ASIA–US ROUTE (% PER TEU)
General Agents, taxes,

administration miscellaneous… Land
10% transportation
22%
Equipment &
containers
17%
Cargo handling
18%
Fuel
15%
Ship depreciation
15%
Note: TEU = twenty-foot equivalent unit

Source: Estimated by the case authors, based on the following sources: I-Chang Chow and Chia-Hui Chang, “Additional
costing equations for jointly-operated container shipping services to measure the effects of variations in fuel and vessel hire
costs,” The Asian Journal of Shipping and Logistics 27, no 2 (2011): 305-32; Konstantinos G. Gkonis and Harilaos N.
Psaraftis, “Some key variables affecting liner shipping costs,” Laboratory for Maritime Transport (2010), National Technical
University of Athens; Nester Goicoechea, and Luis Maria Abadie, “Optimal Slow Steaming Speed for Container Ships under
the EU Emission Trading System,” Energies 14, no 22 (2021): 7487. Actual costs vary by a variety of factors, such as size
of ship, capacity utilization, routes, sailing speed, number of ports called at, time spent and fees at each port, and the size
and efficiency of ships.
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EXHIBIT 7: REPRESENTATIVE SHIPPING RATES (IN US$)
Source: “Freight Rates Rise and Then Rise Again!” Minnews, October 22, 2021.
https://min.news/en/economy/1ef6b287010d721af27bf9203c68f349.html, Rates are based on a composite of 13 shipping
routes from the Shanghai Shipping Exchange: Shanghai (Export) Containerized Freight Index (SCFI)
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ENDNOTES
1
This case has been written based on published sources only. Consequently, except where attributed, the interpretation and
perspectives presented in this case are solely those of the authors.
2
Rose George, Deep Sea and Foreign Going: Inside Shipping, the Invisible Industry that Brings You 90% of Everything
(London: Portobello Books, 2013).
3
Greg Miller, “Liner Capacity Control and the Future of Container Shipping,” American Shipper, December 15, 2020,
https://www.freightwaves.com/news/liner-capacity-control-and-the-future-of-container-shipping.
4
For a quick overview of the history and growth of containerization and the liner shipping industry, see Costas Paris, Thomas
Di Fonzo, and Liliana Llamas, “A Brief History of Shipping,” Wall Street Journal, January 24, 2018,
https://www.wsj.com/articles/a-brief-history-of-shipping-1516789500.
5
Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton,
NJ: Princeton University Press, 2016).
6
Bruce Barnard, “Maersk Claims ‘Absolute’ Reliability for Daily Maersk Service,” Journal of Commerce (online), April 26, 2012,
https://www.joc.com/maritime-news/container-lines/maersk-claims-absolute-reliability-daily-maersk-service_20120426.html.
7
United Nations Conference on Trade and Development (UNCTAD), “Executive Summary,” in Review of Maritime Transport
2020 (New York and Geneva: United Nations, 2020), xi–xiii.
8
David Dollar, “The Future of Global Supply Chains: What Are the Implications for International Trade?,” Brookings, November 17,
2020, https://www.brookings.edu/research/the-future-of-global-supply-chains-what-are-the-implications-for-international-trade.
9
David Crouch, “Maersk Forms New Alliance with MSC after Chinese Setback,” Financial Times, July 10, 2014,
https://www.ft.com/content/3380d8fa-082b-11e4-acd8-00144feab7de.
10
“Shipping Alliances: 2M, Ocean Alliance & THE Alliance,” xChange Solutions (blog), July 31, 2019, https://container-
xchange.com/blog/shipping-alliances.
11
Janet Porter, “Premium ‘Daily Maersk’ Service Abandoned,” Lloyd’s Loading List, March 5, 2015,
https://www.lloydsloadinglist.com/freight-directory/news/Premium-Daily-Maersk-service-
abandoned/61956.htm#.YW3l59nMKBQ.
12
Anila Premti, “Liner Shipping: Is there a Way for More Competition?,” UNCTAD Discussion Paper no. 224, March 2016,
https://unctad.org/system/files/official-document/osgdp2016d1_en.pdf.
13
Calculated by the authors based on data published in Alphaliner, Monthly Monitor, issues from 2017 to 2020,
https://www.alphaliner.com.
14
Yeong Seok Ha and Jung Soo Seo, "An Analysis of the Competitiveness of Major Liner Shipping Companies," The Asian
Journal of Shipping and Logistics 33, no 2 (2017): 53-60.
15
Authors’ estimates based on information from “Alphaliner TOP 100,” Alphaliner, April 2021,
https://alphaliner.axsmarine.com/PublicTop100
16
Nick Routley, “Top U.S. Companies by Import and Export Volume,” Visual Capitalist, March 12, 2019,
https://www.visualcapitalist.com/top-import-export-companies-us.
17
Authors’ estimates. These costs would vary by the size and value of goods, shipping routes, and shipping rates.
18
“A Perfect Storm for Container Shipping,” Economist, September 18, 2021, https://www.economist.com/finance-and-
economics/a-perfect-storm-for-container-shipping/21804500.
19
Christian Steidl, Laurent Daniel, and Cenk Yildiran, Shipbuilding Market Developments: Q2 2018 (Paris: OECD Directorate
for Science, Technology and Innovation, 2018).
20
UNCTAD, Review of Maritime Transport 2020. [United Nations Conference on Trade and Development (UNCTAD), Review
of Maritime Transport 2020 (New York and Geneva: United Nations, 2020).]
21
Olaf Merk, Bénédicte Busquet, and Raimonds Aronietis, The Impact of Mega-Ships (Paris: OECD International
Transportation Forum, 2015).
22
“A Perfect Storm for Container Shipping.” [“A Perfect Storm for Container Shipping,” Economist, September 18, 2021,
https://www.economist.com/finance-and-economics/a-perfect-storm-for-container-shipping/21804500.]
23
Merk, Busquet, and Aronietis, The Impact of Mega-Ships. [Olaf Merk, Bénédicte Busquet, and Raimonds Aronietis, The
Impact of Mega-Ships (Paris: OECD International Transportation Forum, 2015).]
24
All dollar amounts are in USD (US$) unless otherwise stated.
25
GCP Industrial Products, Industrial Sector Cost Report, September 2021, https://www.gcpindustrial.com/wp-
content/uploads/2021/09/Industrial-Sector-Cost-Report-Sept-2021.pdf.
26
“Shipping Industry Facts,” Zeymarine, July 28, 2021, https://zeymarine.com/shipping-industry-facts.
27
Maria Lambrou1, Daisuke Watanabe and Junya Iida, “Shipping Digitalization Management: Conceptualization, Typology
and Antecedents,” Journal of Shipping and Trade 4, no 11 (2019): 1-17.
28
“Shipping Industry Facts.”
29
The World Bank. Air Freight: A Market Study with Implications for Landlocked Countries
https://www.worldbank.org/en/topic/transport/publication/air-freight-study
30
Calculated by the authors based on data published in Alphaliner, Monthly Monitor, issues from 2017 to 2020,
https://www.alphaliner.com, https://www.alphaliner.com.
31
Merk, Busquet, and Aronietis, The Impact of Mega-Ships. [Olaf Merk, Bénédicte Busquet, and Raimonds Aronietis, The
Impact of Mega-Ships (Paris: OECD International Transportation Forum, 2015).]
32
Pierre Cariou, “Liner Shipping, Containerisation and Mega Carriers. What Structural Changes to be Faced by the Industry Operators?,”
Port Economics, February 8, 2021, https://www.porteconomics.eu/mdocs-posts/2021-mega-carriers-worls-shipping-portugal-cariou.
Page 13 W25505
33
Nam Kyu Park and Cheol Suh Sang, "Tendency Toward Mega Containerships and the Constraints of Container
Terminals," Journal of Marine Science and Engineering 7, no. 5 (2019): art. 131.
34
Hercules E. Haralambides, "Gigantism in Container Shipping, Ports and Global Logistics: A Time-Lapse into the Future,"
Maritime Economics & Logistics 21 (2019): 1–60.
35
Cariou, “Liner Shipping, Containerisation and Mega Carriers.” [Pierre Cariou, “Liner Shipping, Containerisation and Mega
Carriers. What Structural Changes to be Faced by the Industry Operators?,” Port Economics, February 8, 2021,
https://www.porteconomics.eu/mdocs-posts/2021-mega-carriers-worls-shipping-portugal-cariou.]
36
Elyakim Ben-Hakoun, Eddy Van De Voorde, and Yoram Shiftan, "Marine environmental emission reduction policy in the
liner shipping the economic impact from trade lane perspective," Maritime Policy & Management 48, no. 5 (2021): 1-29.
37
"Marine environmental emission reduction policy in the liner shipping the economic impact from trade lane perspective."
38
Milan Janić, "Multidimensional Examination of the Performances of a Liner Shipping Network: Trunk Line/Route Operated by
Conventional (Panamax Max) and Mega (ULC–Ultra Large Container) Ships," Journal of Shipping and Trade 3, no. 1 (2018): art. 13.
39
Bruce Barnard, “Idle Container Ship Capacity Hits Record High,” Journal of Commerce (online), March 16, 2016,
https://www.joc.com/maritime-news/container-lines/idle-container-ship-capacity-hits-record-high_20160316.html.
40
Shane Ingram Evans, "Economic Value-Added in the Maritime Container Shipping Industry" (master’s thesis, Pusan National
University, 2016), https://www.academia.edu/29047314/Economic_Value-Added_in_the_Maritime_Container_Shipping_Industry.
“
41
How COVID-19 Put Wind in Shipping Companies’ Sails,” Economist, October 20, 2020,
https://www.economist.com/business/2020/10/10/how-covid-19-put-wind-in-shipping-companies-sails.
42
“A Perfect Storm for Container Shipping.” [“A Perfect Storm for Container Shipping,” Economist, September 18, 2021,
https://www.economist.com/finance-and-economics/a-perfect-storm-for-container-shipping/21804500.]
43
Cariou, “Liner Shipping, Containerisation and Mega Carriers.” [Pierre Cariou, “Liner Shipping, Containerisation and Mega
Carriers. What Structural Changes to be Faced by the Industry Operators?,” Port Economics, February 8, 2021,
https://www.porteconomics.eu/mdocs-posts/2021-mega-carriers-worls-shipping-portugal-cariou.]
44
Mike Wackett, “Q4 20 Most Profitable in Container Shipping History, but 2021 Will Be Better,” The Load Star, April 7, 2021,
https://theloadstar.com/q4-20-the-most-profitable-in-container-shipping-history-but-2021-will-be-better.
45
Sea-Intelligence, “Record USD 24.5bn Carrier EBIT in 2021–Q2,” press release, September 7, 2021, https://www.sea-
intelligence.com/press-room/94-record-usd-24-5bn-carrier-ebit-in-2021-q2.
46
Chris Bryant, “Container Shipping Earnings Now Rival Apple. It’s Not a Good Look,” Washington Post, August 19, 2021,
https://www.washingtonpost.com/business/container-shipping-earnings-now-rival-apple-its-not-a-good-
look/2021/08/19/b270deee-00b7-11ec-87e0-7e07bd9ce270_story.html.
47
Mike Wackett, “A Look Back at 2020—the Year That Container Supply Chains Collapsed,” The Load Star, December 30,
2020, https://theloadstar.com/a-look-back-at-2020-the-year-that-container-supply-chains-collapsed.
48
“The Jumbo Traffic Jam on the Suez Canal,” Economist, March 24, 2021, https://www.economist.com/graphic-
detail/2021/03/24/the-jumbo-traffic-jam-on-the-suez-canal.
49
Harry Dempsey, “Liners Smash Decade-Old Record for Container Ship Orders,” Financial Times, April 8, 2021,
https://www.ft.com/content/77989ec9-e674-4c75-814b-9b7451722ac6.
50
Peter Sand, “Container Shipping: Continued Disruption Will Ensure Carrier Profitability Well into 2021,” Bimco, February 15,
2021, https://www.bimco.org/news/market_analysis/2021/20210225_container_shipping.
51
Lee Long Liang, “Shipping Has Reasons to be Optimistic Despite Serious Challenges,” Seatrade Maritime News, January
3, 2020, https://www.seatrade-maritime.com/containers/shipping-has-reasons-be-optimistic-despite-serious-challenges.
52
Greg Miller, “Shipping Has Reasons to Be Optimistic despite Serious Challenges,” Freight Waves, December 15, 2020,
https://www.freightwaves.com/news/liner-capacity-control-and-the-future-of-container-shipping.

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The Liner Shipping Industry

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THE LINER SHIPPING INDUSTRY: COMPETITION AND BUSINESS

LINER SHIPPING OPERATIONS

THE CURRENT STATE OF THE INDUSTRY

EXHIBIT 1: MAJOR TRADE ROUTES AND VOLUMES (MILLION TEUs)

Transpacific Asia–Europe Transatlantic

Eastbound Westbound Eastbound Westbound Eastbound Westbound

Note: TEUs = twenty-foot equivalent units

EXHIBIT 2: TRADE VOLUME BY TWENTY-FOOT EQUIVALENT UNITS (MILLION TEUs)

Million TEUs Percentage Change

Note: TEUs = twenty-foot equivalent units

EXHIBIT 3: DEMAND AND CAPACITY GROWTH

Source: Alphaliner, Monthly Monitor, April 2020, https://www.alphaliner.com.

EXHIBIT 4: INDUSTRY CAPACITY, MARKET SHARE, AND ORDERS

1 Maersk 4,130,094 712 16.8% 16.8% 39,388 15 1.0%

2 Mediterranean Shipping (MSC) 3,921,884 590 16.0% 32.8% 635,888 34 16.2%

3 COSCO 3,009,234 499 12.3% 45.1% 276,000 12 9.2%

4 CMA CGM 3,006,290 553 12.3% 57.4% 354,024 23 11.8%

5 Hapag‐Lloyd 1,783,809 256 7.3% 64.7% 141,600 6 7.9%

6 Ocean Network 1,596,885 220 6.5% 71.2% 266,152 15 16.7%

7 Evergreen 1,330,785 200 5.4% 76.6% 703,573 74 52.9%

8 HMM 750,872 74 3.1% 79.7% 96,060 6 12.8%

9 YangMing 628,463 89 2.6% 82.2% 125,598 12 20.0%

10 ZIM 417,098 97 1.7% 83.9% 150,000 10 36.0%

Total top 10 20,575,414 3,290 83.9% 83.9% 1,921,064 177 9.3%

Next 20 1,698,785 828 6.9% 90.9% 300,840 93 1.2%

Industry total 24,515,261 6,201 100.0% 100.0%

Note: TEUs = twenty-foot equivalent unit.

EXHIBIT 5: INDUSTRY FLEET GROWTH AND THROUGHPUT

Million TEUs Capacity Growth % Global Throughput Growth %

Note: TEUs = twenty-foot equivalent units.

EXHIBIT 6: COST DISTRIBUTION ON A REPRESENTATIVE ASIA–US ROUTE (% PER TEU)

General Agents, taxes,

Note: TEU = twenty-foot equivalent unit

EXHIBIT 7: REPRESENTATIVE SHIPPING RATES (IN US$)

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