Author: Aytac Akgul

Why Do Ocean Container Carriers Lose Money?

It’s an essential principle in Finance that every company when they start in any business, aims to make profit from their services or products. However, as we take a look at the current situation of the shipping industry, this principle has been ignored and resulted in huge financial losses over the past several years. We all know that Ocean container carriers aware of the losses before they occurred just because their business strategy or budget for the upcoming years to be volume-oriented in order to get more market share from the competitors. We understand this simple strategy, however can’t they make...

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What is Going to Happen to the Ocean Alliances After Things are Back to Normal in the Ocean Container Shipping Industry?

First, it’s important to understand the idea behind the creation of the ocean alliances. Over the past couple of years, ocean container carriers have formed into four mega-alliances, largely to create economies of scale. By sharing space on mega-vessels, carriers benefit from lowered operating costs due to their large volume. After the alliances were created, some carriers wanted to benefit from other carriers’ services based on their flagship trade. You can see these changes in the below table: Back in 2014, the first questions from exporters/importers were asking “Will the mega-alliances mean lower freight rates, or higher ones? More sailing...

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Panama Canal Expansion’s Impacts on US Shipments

The Panama Canal Expansion is the largest project at the Canal since its original construction. The project is expected to create a new lane of traffic along the Canal through the construction of a new set of locks, doubling the waterway’s capacity. The existing locks allow the passage of vessels that can carry up to 5,000 TEUs. After the expansion, the Post-Panamax vessels will be able to transit through up to 13,000/14,000 TEUs. The Expansion will double the Canal’s capacity, thus having a direct impact on economies of scale and international maritime trade. The Program consists of several components:...

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Now Amazon as an NVOCC

Everyone in the international shipping industry is talking about the latest news that Amazon has received a license from the FMC to operate as a NVOCC from China to the United States. Amazon is not the first e-commerce company which gets its own license to control their own freight. Walmart did the same thing; however, Walmart didn’t start their business through e-commerce first. In that sense, Amazon’s move in the shipping industry will be an example to its competitors. My forecast for future move will be coming from Alibaba.com since they are more trade sense company than Amazon already...

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Commercial Side of Container Shipping Industry

The container shipping industry has been very unprofitable over the past 3-5 years. Making things worse, earnings have been exceptionally spasmodic due to several reasons. This effects the business margins in between the direct customers and Non Vessel Owning Common Carriers, or carriers and vessel owners as a result of globalization in trade, which is highly depended on economic growth or economic depressions. It’s always win-win theory in the cycle of service providers and customers when economic growth is sustainable. The demand in the shipping industry determine the carriers’ margins, which directly effects the customers’ shipping costs.  On the other...

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