Maritime industry: preparing for an uncertain future


Maritime industry: preparing for an uncertain future

Finding a new balance between supply and demand

The future of the maritime industry remains uncertain. How can you balance supply and demand, what strategy should you choose, and how can new technologies help?

Eric Vennix - 14 february 2017

Demand and supply

Here are two facts about the maritime industry: first, it has always been driven by demand and supply in the global market. Secondly, building a ship takes years and years. Ships that were ordered before 2008, just before the start of the global economic crisis, have only recently been launched.

The future remains uncertain

Both facts explain why the maritime industry is now suffering from overcapacity and, consequently, low freight rates and relatively high operational costs. A situation that is not likely to change soon in this capital-intensive and not very agile industry. Regulation is insufficient or absent, Brexit will bring even more uncertainty, and the possible lifting of the sanctions on Iran in the near future will disrupt the market even further. The future will remain uncertain for a long while and major shakeouts are expected.

Pushed out of the market

Highly leveraged shipping companies suffer most from the crisis. We have already seen the acquisition of Hamburg Süd by Maersk. Both were big players, but Hamburg Süd was highly leveraged, whereas Maersk has always had enough equity capital. Smaller companies are usually highly leveraged as well and run the risk of being pushed out of the market. Adjacent industries, such as offshore and shipbuilding, suffer greatly from the economic crisis too. The exception to the rule are diversified companies, such as shipbuilders who build superyachts, cruise ships, or navy ships.

Traditional solutions

One of the traditional solutions for such a lack of balance between supply and demand would be scrapping part of the fleet. However, many ships have only recently been launched. Scrapping would be a waste of capital. In fact, two solutions remain. The first one is: becoming the largest commodity player – through mergers & acquisitions, reorganizing the back office, creating large economies of scale, and being able to charge low costs. The other one is differentiation: moving into a niche market, such as high quality chemicals, or expanding the service portfolio (e.g., shipping companies that also specialize in terminal handling).

New solutions

Many of our clients have already switched to one of these strategies. For instance, we are helping one of our clients to diversify. So far, they have bought many ships from cancelled orders or from the inventory of bankrupt companies, and used them for time charters. However, they are interested in other options as well, for which they have asked our advice. Also, we use Big Data and customer segmentation for some of our clients in the industry, to help them plan capacity and improve forecasting through geolocation. Big Data helps them discover patterns in the supply chain in advance, and market trends that will impact demand.

Market entry strategies

Other clients require our advice for mergers, acquisitions, joint ventures, restructurings, bad debts analyses, or market entry strategies. For instance, a certifying agency for the maritime industry has asked us how they could expand their services to other industries. Another company, which used to be a mining company but which also has its own fleet to ship their raw materials, is looking for other options to use their fleet.


Next to developing a clear strategy, whether to become a niche player or a large commodity player, it is crucial to be aware of the financial situation. Innovation might help to lower the operational costs. For instance, smartports and autonomous vessels. However, due to insufficient or absent laws and regulations, the bottleneck remains cyber security. Shipping companies and ports should be very aware of potential risks. We can help with those challenges as well – to prepare your organization for an uncertain future.

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