When The 'Wart started, there were two of us. One of us is still here, not having really moved forward with life. The other, Vincent, is now a banker in Asia, having actually accomplished something. And he was recently quoted intelligently in a Dow Jones newswire piece about shipping consolidation:
Hanjin Shipping Co. Ltd. (000700.SE), STX Pan Ocean Co. Ltd. (028670.SE), and Hyundai Merchant Marine (011200.SE) also said that they have no interest in Hapag-Lloyd. The shipping industry is being pressured by rising fuel costs and a slowdown in traffic on critical routes. Following the denials, some analysts said most players will stay focused on turning profit from existing operations, giving NOL a clear path to pursue Hapag-Lloyd. "I haven't seen any other player who seems to be signaling that they're looking to consolidate," said Vincent Fernando, an analyst at Citigroup in Hong Kong. "When there's a worry of just managing profitability with what you have now, the incentive to take on more uncertainty just doesn't make sense." Container volume between Asia and North America declined in 2007, and Fernando said the route may continue to suffer as economic growth in the U.S. dwindles.
And here's a lesson:
Analysts said consolidation among large players may not pay off in the near term, another deterrent for would-be bidders."The benefits aren't necessarily historically proven," Fernando said. After buying P&O, Maersk was forced to lower rates to keep customers and analysts said it continues to grapple with integration issues.
A point to be considered in plenty of industries beyond shipping.
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