OPINION: Shipping lines and logistics operators are expanding their business models

THE AUSTRALIAN Competition & Consumer Commission (ACCC) recently concluded that DP World Australia’s takeover of Silk Contract Logistics will not result in a substantial lessening of competition and has approved the proposed acquisition. 

Is this another example of shipping lines and logistics operators widening their business interests and adjusting their business models to offer their clients a one-stop shop and potentially lessen competition? 

DP World Global and DP World Australia have been expanding their suite of business offerings in the last few years, where they now offer logistics and supply chain services as well as stevedoring. DP World Global has even acquired shipping lines under their subsidiary P&O Maritime Services brand. 

The three largest shipping lines, Mediterranean Shipping Company (MSC), Maersk, and CMA CGM have also expanded their services, even entering the airfreight business where they own or part-own freighter aircraft which they can now offer to their clients. CMA CGM has even branched out into the media business. 

In the case of MSC, the recent proposed acquisition of Hutchison Port Holdings (HPH) by the Black Rock-TIL Consortium (Terminal Investment Limited is 70% owned by MSC) will assist in offering more services to MSC’s clients. If the acquisition goes ahead, it will mean that MSC will be able to include stevedoring services at a number of container terminals. As this sale affects two of HPH’s container terminals in Australia it will be interesting to see if the ACCC has a view on this. 

What does all this mean for the shippers? Will they enjoy the convenience of being able to use only one platform and dealing with one central contact point to track their shipment, or does it lessen their choice of how they want to ship their goods from A to B? And will regulators be able to ensure fair access for independent operators? 

During my time at Patrick Terminals, who at the time offered integrated services such as stevedoring, road and/or rail transport, container storage and pack/unpack, I found that large importers and exporters preferred the convenience of having to deal with only one contact to find out what was happening with their cargo. It also meant that if something went wrong in one leg of the chain, it was possible to rectify this in the other legs of the chain. For instance, a late receival for an export container could be arranged, or storage on an import container could be waived. Smaller businesses were more reluctant to use these integrated services as they thought that they would be able to negotiate better pricing in dealing with separate legs in the supply chain. 

With integrated services in supply chains becoming more widespread, it might become more difficult for shippers, especially small to medium-sized, to pick and choose how their goods are being transported across the globe.