M&As, more than alliances ideal for shippers to cope with industry challenges: BCG

M&As, more than alliances ideal for shippers to cope with industry challenges: BCG

M&As, more than alliances ideal for shippers to cope with industry challenges: BCG Boston Consulting Group (BCG) said in a recent report that players in the shipping industry stand to benefit more from global- and country level mergers and acquisitions as compared with the boon of joining alliances.

However, the firm did not discount the benefits of alliances, provided that members identify areas for sharing resources and pooling efficiencies.

BCG explained that these strategies are needed as the industry enters a new normal phase of slow growth and persistent overcapacity.

In M&As, the company said that parties should “harvest synergies” by being smarter in deploying their fleet and network coverage.

If brought to another level, merged companies could also benefit from alliances as these partnerships create a multiplier effect in achieving efficiencies.

“Carriers have been shy about going after the full benefits alliances offer, such as cost savings from joint procurement or joint operations. Today, with a low bunker cost, the slot-cost advantage of ultra-large vessels is weaker than it was in times of super-high bunker costs. Additionally, alliances that comprise many players are complex, especially in terms of operations, and they generate a degree of rigidity that can hinder optimization of networks and operations,” BCG said


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