How can an ocean carrier survive a market where rates are plummeting and capacity is wide open? How can they continue in business when their average in-take is lower than their break-even point? In a market economy, logically, that cannot happen. BUT, when national pride and the need to sustain an otherwise sagging industry like ship-building take precedence, then governments can be moved to subsidize their flag carriers to make sure they are viable.
However, for those carriers who are publically and privately held, this seems grossly unfair as they turn to conventional methods to support their efforts. So, while carriers like Cosco and Yang Ming go home to mom and dad for more funds and for bigger ships, carriers like Hapag and the newly created Ocean Network Express (ONE) are looking at cutting operating costs and streamlining their back offices with mergers.
Ultimately, keeping costs down, focusing on technological solutions, and, lest we forget, customer care will be important. While we cannot ignore that fewer carriers will lead to less competition, we also cannot ignore that big government pockets are forcing these mergers.
As the consumer enjoys short-term rate relief due to the higher capacity, we have to be realistic in the long-term result of very limited customer service, and eventual higher rates due to monopolization of the market by the few who survive.