oligopoly on the oceans.
(Photo: IMAGO/Markus Tischler)
For years, the antitrust authorities turned a blind eye. World market leader Maersk swallowed up the powerful German shipping company Hamburg Süd almost unhindered, Hapag-Lloyd absorbed the competitors CSAV and UASC, and the three largest ship operators in Japan merged to form the shipping company ONE. In China, it was the government itself that gave the ship operator a national monopoly.
The consequences of the wave of mergers that have wiped out half of all global liner shipping companies over the past six years read like a textbook. The nine largest shipping companies now have a world market share of 82.8 percent, while before the turn of the millennium 20 of them barely had to share half of global container transport.
The damaged competition is likely to have helped shipping companies to multiply their net profits in 2021 – at Hapag-Lloyd, Maersk and CMA CGM they grew by a factor of about ten. The importers paid the bill. The average price of a 40-foot steel box from the Far East to Northern Europe climbed from under $2,000 to over $15,000 at times within two years.
The unwelcome effects of lax merger control are now even alarming US President Joe Biden. Since March he has been pushing Congress for legislation that would allow his Federal Maritime Commission stricter merger control. The US government intends to use it to combat high inflation rates.
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The hopes are justified. Industry experts estimate that logistics account for five to nine percent of the product costs for imported sofas, toys or home trainers. Price jumps in sea transport thus inevitably end up at the till.
>> Read here: Shipping companies invest billions in acquisitions from the logistics industry
In particular, Biden wants to keep shipping company cooperations under observation – for the obvious reason: just five years ago, the antitrust authorities worldwide allowed, as if the market dominance of nine shipping companies were not already oligopoly enough, for these to also join together to form three global alliances.
In fact, however, the cartel dangers have been lurking elsewhere for a long time. While mergers and mergers are hardly to be feared due to a lack of mass, the financially strong ship groups have long since shifted their acquisitions to the vertical. With sums in the billions, they turn to freight forwarders, warehousing and e-commerce service providers.
Not even airlines like Lufthansa or the Alitalia successor company Ita Airways are safe from them. Competition guardians should not turn a blind eye to this again. After all, medium-sized competitors in particular could be eliminated.
More: Merchants unite for more on-time ocean freight deliveries