Shipping’s Extreme Consolidation Could Prolong Supply Chain Pain
By Greg Miller of Freightwaves,
U.S. policymakers have never been more focused on global container shipping than they are today. Yet the “steel” of this industry — the ships and the containers — is outside of U.S. control, consolidated into the hands of an extremely small circle of non-U.S. companies that continue to bolster their market shares. The big keep getting bigger.
Olivier Ghesquiere, CEO of container-equipment lessor Textainer, summed up the situation during his company’s quarterly conference call.
“The question we always get is: How long will this last? In my opinion, it’s really about consumer demand that’s running very high and this can only be resolved in two ways: either by consumer demand coming down a bit or with infrastructure investment increasing. And as you can guess, infrastructure investment takes a long time.
“So our view is very much that this environment is here to stay for some time, and because of that, we’re unlikely to see a change in behavior of the various players in the industry.”
No incentive to change behavior
Three main decision-making groups steer vessel and equipment pricing and availability: shipping lines, which offer freight rates and purchase and lease ships and containers; container equipment lessors, which order new boxes and offer leasing rates; and container factories, which offer the prices for newly constructed boxes.
Only a handful of companies control capacity in each of these three groups. And in each case, the current market situation is enormously profitable, removing incentives to compete more on price.
According to data from Alphaliner, the top eight liner companies now control 81% of global capacity. Ghesquiere noted that prices obtained by shipping lines “are extremely high … [and] there is still plenty of cargo waiting to be shipped in Asia, so shipping lines really are in an environment where there is absolutely no need to change their behavior.”
The same goes for container equipment factories, virtually all of which are in China. Following recent consolidation, the top three Chinese builders produce 83% of all new boxes. “They are charging expensive prices for their containers,” said Ghesquiere. “They have a vested interest in maintaining the high pricing levels, so we really can’t see why manufacturing prices would drop. They have no incentives to change behavior.”
The pattern repeats yet again in the container-equipment leasing sector. Following recent consolidation, the top five players control 82% of the world’s leasing capacity. “Likewise, there is no risk here that the major players would suddenly change their behavior,” maintained Ghesquiere.
Add it all up and it equates to a grand total of just 16 companies — eight liners, three factory groups and five box lessors — that control over 80% of container-ship capacity, box-production capacity and box-leasing capacity. Shareholders of each of these 16 companies would benefit financially if today’s high pricing persists.
Ocean carrier consolidation
Ocean carriers have been busy placing orders for new ships, whether directly on their own accounts or indirectly through chartered tonnage ordered by vessel-leasing companies. The orderbook has more than doubled since last year, but the new ships won’t hit the water until 2023-24, offering no relief to U.S. cargo shippers in 2022.
As the new ships are being built, leading liner companies are acquiring secondhand tonnage, further consolidating the market.
According to Alphaliner, the top eight liners are Maersk (based in Denmark), MSC (Switzerland), CMA CGM (France), Cosco (China), Hapag-Lloyd (Germany), ONE (Japan), Evergreen (Taiwan) and HMM (South Korea).
Five months ago, these eight carriers had 19.7 million twenty-foot equivalent units of capacity on the water. Since June, they added 435,236 TEUs of capacity, bringing their combined fleet to 20.1 million TEUs and their market share to 81.1%.
The net gain since June was driven entirely by increases in owned tonnage as opposed to new charters (the charter market is largely sold out), with MSC leading the charge as it continues to buy an unprecedented number of secondhand vessels.
The largest liner companies are set to further increase their market dominance in 2023-24 when newbuilds are delivered, to the extent deliveries are not counterbalanced by lease expirations and scrapping of older tonnage.
According to Alphaliner data, Maersk’s orderbook totals 6% of its on-the-water capacity, CMA CGM’s orders-to-fleet ratio is at 17%, HMM and Cosco 20%, ONE 21%, Hapag-Lloyd 23%, MSC — which is far outpacing Maersk and is destined to become the world’s leading carrier — 24%, and Evergreen a whopping 48%.
Liner shipping’s consolidation transpired amid the loss-making market of the past decade, setting up surviving carriers to reap the benefits of the COVID-era surge in consumer demand.
Maersk bought Hamburg Süd (in 2017); Cosco merged with China Shipping (2016) and bought OOCL (2018); Hapag-Lloyd merged with CSAV (2014), bought CCNI (2015) and acquired UASC (2017); CMA CGM bought APL (2015); NYK, K Line and MOL merged into ONE (2016); and a major competitor — Hanjin Shipping — went insolvent (2016).
As Vespucci Maritime CEO Lars Jensen told American Shipper in a previous interview, “We have definitely seen the effects of consolidation. At least on the main trades, there is a de facto oligopoly, which means the carriers are able to somewhat better prevent the price wars we’ve seen in the past. This is the logical end point of 20 years of gradual consolidation.”
Container manufacturing consolidation
As consolidated as liner shipping is, its market concentration pales in comparison to the box-manufacturing sector.
As previously reported by American Shipper, container manufacturing is dominated by a small number of Chinese businesses, most with ties to the state.
Data from consultancy Drewry shows that the China International Marine Containers (CIMC) Group had a 42.5% share of H1 2021 production, Dong Fang International Containers 25.5% and the CXIC Group 14.1%.
The dominance of the top three is increasing. Dong Fang hiked its capacity in 2019 by purchasing factories from one of the smaller players, Singamas. This September, CIMC agreed to buy Maersk Containers for $1.08 billion including assumed debt. The deal is expected to close by year-end, giving CIMC another 1.2% of market share and bringing the top three’s share of H1 2021 production to 83.3%.
Chinese box manufacturers are producing a record number of containers this year. Textainer predicted that production would exceed 6 million TEUs, while container equipment lessor Triton (NYSE: TRTN) estimated around 5.4 million TEUs. The previous record, according to Drewry, was 4.4 million TEUs in 2018.
Even so, China’s top three are protecting their pricing and not flooding the market with excess containers. The cost of a new container remains at an all-time high of around $3,800 per TEU.
According to Ghesquiere, “There’s only three major manufacturers. When they can’t get enough orders, they prefer to reduce production and working hours at the factories [versus reducing pricing]. That’s certainly a sign that they are not changing their behavior.”
Container leasing consolidation
Containers used to move ocean cargo are owned by liner companies or by equipment lessors. Textainer puts the split at around 50-50.
Among equipment lessors, Bermuda-domiciled Triton is the largest, with 25% of leased capacity, according to an investor presentation this month by Textainer. Triton rose to the top of the pack after a merger with TAL in 2015.
Bermuda-domiciled Textainer is in second with an 18% share. Next in line with 14% are Florens, owned by China’s Cosco, and also with 14%, the combined holdings of CAI and Beacon. The owner of Beacon, Japan’s Mitsubishi HC Capital, acquired CAI (NYSE: CAI) for $1.1 billion in a deal that’s expected to close this quarter. Rounding out the top five is Seaco, controlled by China’s HNA, with an 11% market share.
Comparing market concentration in container leasing to the liner business and container manufacturing, Ghesquiere said, “It’s pretty much a similar environment — we have five main players.
“Leasing companies haven’t necessarily gouged customers in terms of the prices [but lease] durations have certainly been extremely positive and yields have been attractive. The inventory levels of most [leasing] players are extremely low, with everybody enjoying utilization rates above 99%. So it would take quite a few quarters until we would potentially see a change in behavior here.”
Best Mining Penny Stocks to Buy Right Now? 3 To Look at This Month
Will these mining stocks make your watchlist? When discussing mining penny stocks,…
The post Best Mining Penny Stocks to Buy Right Now? 3 To Look at…
Will these mining stocks make your watchlist?
When discussing mining penny stocks, it is difficult not to highlight how well they have performed over the last year and a half. It all started with the pandemic, which pushed precious commodities like gold and silver to new highs. As a result, more types of mining equities began to perform better. There are far more of these assets than many investors think.
Many people think of gold and silver stocks when they think about mining assets. In reality, there are numerous different types of mining stocks. Companies in this category include those that look for copper, steel, uranium, lithium, lead, and other minerals. Bitcoin mining stocks, for example, can be considered for this type of asset.
What should you look for when investing in mining penny stocks, you may be wondering? There are a few critical actions that may be taken to ensure that the moment is perfect to invest in a company. The first and most obvious step is to read the news from across the world. Consider how the pandemic affected and continues to affect the mining industry. Sector news is also critical; for example, shortages and growing demand are useful pieces of information to have. Let’s look at three mining stocks performing well in December 2021.
Top Mining Stocks To Watch
mining penny stock that just gained 2% on December 2nd. This is a mining business that is engaged in uranium development. The development business owns a 95 percent share in the Wheeler uranium project, which is located in the Athabasca Basin of northern Saskatchewan. This is a mining stock that has previously gotten a lot of attention on this site due to its consistent upward market momentum.is a
The corporation announced the adoption of an Indigenous Peoples Policy, or IPP, on December 2nd. The Board of Directors endorsed this, which indicates the company’s acknowledgment of the critical role of Canadian business in reconciling with Indigenous peoples in the country. This is consistent with Denison’s pledge to take action to advance reconciliation. This was critical for the corporation because it operates in several areas across Canada that are on Indigenous peoples’ traditional territory.
President and CEO of Denison, David Cates said, “I believe Industry has an important role to play in acknowledging, and building awareness of, the history of Indigenous people in Canada and the critical importance of pursuing the objectives of reconciliation. As such, the adoption of an Indigenous Peoples Policy is a notable step in our Company’s journey to bring reconciliation to the forefront of what we do and how we do it.” DNN stock has increased in value during the last six months. Will DNN stock be added to your watchlist as a result of its recent advancements?
is a gold mining company that has seen its stock price rise in the previous 30 days. This firm looks for, develops, and manages land for the sale of gold in a variety of countries. IAMGOLD is a global company with operations in North America, South America, and West Africa. These territories are home to the Westwood mine, the Boto gold project, and a slew of other ventures.
IAMGOLD released their third-quarter results for 2021 on November 3rd. The firm released its third-quarter results for 2021 on November 3rd. IAMGOLD generated $121.6 million in mine-site free cash flow, while adjusted EBTIDA was $265.7 million. During the same time period, IAMGOLD reported a total net loss of $20.1 million, or $0.04 per share. Despite certain flaws in its financial results, IAMGOLD has had several moments of strong performance this year.
CEO and President of IAMGOLD, Gordon Stothart said, “The third quarter of 2021 saw improvement in our operating performance supported by the continued strong results at Essakane. Rosebel performed in line with the revised plan. Construction activities at Côté continue to proceed well, reaching 36% project completion at quarter-end.” Is IAG on your list of mining penny stocks to watch right now?
We’ve previously identifiedas a mining penny stock with a lot of momentum on multiple occasions. This firm develops and manages a number of mineral properties throughout North America. The Rainy River gold-silver mine, which it controls 100 percent of, is one of its most important assets. The Rainy River mine is located in the Canadian province of Ontario. In addition, the corporation owns a 100% stake in the New Afton gold-copper mine. This mine is in the Canadian province of British Columbia.
On October 13th, the company revealed its third-quarter operational results. New Gold produced a total of 105,628 gold equivalent ounces throughout this time. Rainy River and New Afton mines yielded 60,785 and 44,843 gold equivalent ounces, respectively. Due to fewer tons milled, its gold equivalent production dropped in the third quarter.
President and CEO of New Gold, Renaud Adams said, “We remain on track to deliver on our updated guidance, and we continue to make progress towards securing the Company’s future growth at both assets. Our liquidity position improved for a third consecutive quarter, and I continue to expect meaningful free cash flow generation from our operations in the near-term” Amid these new developments, will NGD be on your mining penny stock watchlist?
Top Mining Penny Stocks To Buy?
Penny stocks are infamous for being extremely volatile and unpredictable. As a result, it is suggested that you concentrate on studying and investing carefully. No one knows what will happen to mining stocks in the market as long as inflation fears persist. As we approach 2022, only time will tell what happens to mining penny stocks. For the time being, which companies will you add to your watchlist?
The Buckingham Graphite Project – Noble Mineral Exploration (TSX.V: NOB)
CEO, Vance White and Exploration Manager, Wayne Holmstead had us out to the Buckingham Graphite property to highlight the opportunity it presents the company….
CEO, Vance White and Exploration Manager, Wayne Holmstead had us out to the Buckingham Graphite property to highlight the opportunity it presents the company. Graphite of this quality will be in high demand as several auto manufacturers have publicly stated they will shift to EV’s by 2030. Furthermore, the Quebec government is already taking steps to ensure that Quebec is a leader in Battery metals, manufacturing and clean energy.
About The Buckingham Graphite Project
The Buckingham graphite property is located in the Outaouais area of the Grenville Subprovince of Quebec. It consists of 30 claims (1803 hectares) and contains 3 separate graphite occurrences. The main occurrence (McGuire) was worked by Stratmin Inc. in 1985-86 when a ground electromagnetic survey was done following a regional airborne survey. Three diamond drill holes were completed to intersect the electromagnetic anomalies, 2 of which intersected graphite mineralization which was found to be hosted by marble and gneissic rocks.
Although the nature of the graphite on the Buckingham Property has not been determined, graphite concurrences in this area are normally coarse grained, flake graphite. This type of graphite is the most desirable of the naturally occurring types that is used to produce lithium-based batteries. Lithium-based batteries are required for a variety of ‘green’ technologies, including electric vehicles. The global demand for these types of products is expected to rise as world governments lean towards environmentally friendly products rather than petroleum-based ones.
The second graphite occurrence (Cummings) is described as a “deposit in the form of narrow bands of graphite occurring in gneiss and marble over a length of 300 m and a width of 30 m. The graphite occurs in several irregular bands within the 30 m zone.” The Cummings Occurrence is located about 1.5 km southeast of the McGuire Occurrence.
The third graphite showing on the property is called the Robidoux Occurrence and is located about 4 km east of the McGuire Occurrence. It was described by the Quebec Superintendent of Mines in a 1910 report as a “partially uncovered graphitic bed over a length of about forty feet. Some shallow pits have also exposed graphitic outcrops, presumably of the same bed, for an additional distance of 75 to 100 feet. The bed where exposed by the main stripping is about four feet thick and dips into the side of a low hill at an angle of 40 to 50 degrees.” It was also noted that “the graphite ore contains over 30% carbon.”
About Noble Mineral Exploration
is a Canadian-based junior exploration company which, in addition to its shareholdings in , and , and its interest in the Holdsworth gold exploration property in the Wawa, Ontario area, holds approximately 72,000 hectares of mineral rights in the Timmins-Cochrane areas of Northern Ontario known as Project 81. Project 81 hosts diversified drill-ready gold, nickel-cobalt and base metal exploration/VMS targets at various stages of exploration. More detailed information is available on the website at www.noblemineralexploration.com
For additional information please visit www.insidexploration.com/nob/ and be sure to follow Insidexploration through our various social media platforms.
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The content of this video contain forward looking statements and are subject to change. We caution the viewer that this video is for informational purposes and should not be considered investing advice. Prior to making investment decisions, we encourage you consult a financial advisor and always do your own due diligence.
EV Nickel starts trading on TSX Venture Exchange
TORONTO – EV Nickel Inc.’s [EVNI-TSXV] initial public offering (IPO) prospectus dated November 19, 2021, has been filed with and accepted by the…
TORONTO – EV Nickel Inc.’s [EVNI-TSXV] initial public offering (IPO) prospectus dated November 19, 2021, has been filed with and accepted by the TSX Venture Exchange and has begun trading on the Exchange.
The closing of the IPO, scheduled for December 2, 2021, was expected to have gross proceeds of $5,440,292 for a total of 1,442,200 flow-through (FT) common shares at 86 cents per FT common share and of 5.6 million units at 75 cents per unit. The company has 30,355,667 common shares issued and outstanding
EV Nickel, classified as a Tier 2 issuer, is a Canadian nickel exploration company, focused on the Shaw Dome area, south of Timmins, Ontario. The Shaw Dome area is home to its Langmuir project, which includes W4, the basis of a 2010 historical estimate of 677,000 tonnes at 1% nickel for approximately 15 million pounds of Class 1 nickel.
EV Nickel’s objective is to grow and advance a nickel business, targeting the growing demand for Class 1 nickel from the electric vehicle battery sector. EV Nickel has almost 9,100 hectares to explore across the Shaw Dome area and has identified 30 km of additional strike length.
“We are excited to get out into the public markets and begin telling the world about our wonderful assets, on the Shaw Dome, just south of Timmins,” said Sean Samson, president and CEO. “The world needs more nickel and especially the type of high-grade, clean nickel that we plan to build our business around. Decarbonization is the challenge of a lifetime and we plan to source the material that will help the EV [electric vehicle] companies grow and help address that challenge.”
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