How Major Shipowners Are Reshaping the Global Logistics Landscape

In the past few years, major shipowners have increasingly taken steps to consolidate the logistics industry. Following the pandemic period of 2020 – 2021, container rates escalated to $12,000, up from $2,000 for a 20-foot container on certain routes. This rise resulted in substantial profits for shipowners and enabled them to expand their business holdings.

 

Industry Consolidation and Expansion

Today, carriers are actively investing in cargo airlines, establishing their own fleets of cargo planes, and acquiring stakes in port management entities. Additionally, these carriers have expanded into railway transport and are purchasing e-commerce and automotive logistics businesses.

While sea freight remains the primary focus, shipowners are expanding beyond their traditional operations to provide comprehensive services throughout the supply chain. Now they can manage the entire logistics chain, from collecting products at manufacturing sites in Asia, moving them to ports, distributing them globally, warehousing cargo, and providing direct-to-door delivery services.

Before long, a single carrier might oversee every mode of transport and every phase of cargo transit. Additionally, as shipowners transform into comprehensive logistics operators, they can offer customs services and added value, including inventory management, supply chain optimization and consulting, along with cross-docking and consolidation services. They might also provide reverse logistics and returns management, value-added processing, and services related to demand forecasting and planning.

 

Potential Consequences of Consolidation

This consolidation of power can lead to serious repercussions. First, dominance by a few large entities can limit competition which could result in higher prices and fewer choices for consumers. Second, when a few players control the entire supply chain, there is less competitive pressure to innovate. These large entities may become complacent as they face little threat from smaller or new competitors who could introduce innovative solutions. Moreover, concentrated power in the hands of a few can result in a focus on maintaining control rather than pursuing innovative ideas. Third, this increased power can undermine the bargaining position of smaller businesses and clients which can lead to unfair terms of service and pricing. Lastly, centralizing control over various modes of transport and logistics functions into a few entities can create supply chain vulnerabilities. Any disruption affecting the dominant player, whether due to operational issues, financial instability, or geopolitical factors, can have widespread impacts on the entire supply chain.

 

The Realistic Outlook

That said, is this scenario realistic where customers choose to work directly with these larger carriers and bypass forwarders? In reality, logistics companies provide unique advantages that larger players may struggle to match, including bespoke solutions, personalized service, and deep local knowledge. Additionally, European logistics companies specialize in niche areas such as luxury yacht and submarine equipment transport, experimental research logistics, and government and diplomatic shipments. Last but not least, forwarders serve customers by selecting appropriate carriers, securing favorable terms and shipping rates, and representing clients in disputes. After all, it is challenging to expect a carrier advocating for a client’s interests in a conflict involving itself. The advantage of using forwarders comes from their ability to navigate these situations.