Container shipping lines need to adopt more disciplined business practices to recover from the losses they suffered in recent price wars, according to The Boston Consulting Group.
In a report entitled “Charting a new course: restoring profitability to container shipping”, BCG argues that the industry’s problems are “primarily the result of a self-inflicted supply-and-demand imbalance, which triggered intense competition and price wars”.
“Carriers should not be willing to accept the volatile financial performance they have experienced in recent years,” said Ulrik Sanders, a BCG senior partner and co-author of the report.
“Although it’s true that carriers are exposed to market forces that make profitability hard to sustain, they can overcome these challenges by bringing the right mix of discipline and diligence to each aspect of the business.”
And Lars Fæste, BCG partner and co-author of the report, said: “The industry must find ways to make money in periods of excess supply by exercising all options to achieve capacity discipline. These actions include not only slow steaming, idling vessels, and scrapping tonnage but also intelligently pricing services. Additionally, carriers must not hesitate to shut down a business that doesn’t deliver economic results.”