European shipping lines' domination in the world container shipping market is on the increase. In spite of continuous shipping recession triggered by eurozone financial crisis and oversupply of vessels, European shipping companies are more and more thriving. Their share in the world liner market accounted for 53% as of Jan. 2012, which is up 20 percent point from 33% of 1995.

Vessel tonnage rate for Korea's Hanjin Shipping and Hyundai Merchant Marine(HMM), on the other hand, went through sharp fall  compared with number 1 carrier from 47% and 30%(1995) to 19% and 13% each in Jan. this year.

Korea Maritime Institute(KMI) analyzed the background on the recent report of 'Changes and prospect in competitive landscape of liner market' that increasing market expansion by European shipping has become outstanding.

5 European lines lead the liner shipping market

The most typical European global carriers are regarded as Maersk, MSC, CMA CGM, Hapag-Lloyd and Hamburg Sud. Total vessel tonnage of these 5 lines reaches 7.06 million TEUs accounting for 53% of that of the top 20 shipping lines.

More than half of the vessels being operated on the world trunk route are captured by European lines. In particular, the vessel tonnage of the top 3 including Maersk, MSC and CMA CGM indicates 45% in the global shipping market with 5.98 million TEUs. It is believed that 5 European shipping companies are earning more than 50 billion dollars in the world freight market that is estimated at about total 100 billion annually.

The growth background of European carriers has much to do with M&A and enormous size of the vessels. There were 45 deals in the world shipping M&A market during 1993~2007 period. Except for 3 cases among these, European lines got involved directly and indirectly with all the deals. That is why European companies have been able to see rapid growth.

Their vessel tonnage has sharply increased lately caused by intensive orders for 10,000 TEU class ultra large container vessels. MSC has deployed 45 units of 10,000 TEU class container ships so far whereas Maersk and CMA CGM have done 21 vessels each. Considering another 25 units already ordered, the gap with other shipping lines is expected to keep widening for the time being.

Particularly these shipping lines are running terminal business around the world major terminals as well, which means they have strong competitiveness by having a grip on networks not only at sea but at the terminals.

APM Terminals, a Maersk's terminal operator, have port terminals in 55 regions globally while MSC and CMA CGM are also operating terminals in 25 and 19 regions each. Based on such sea and terminal network, the status of European enterprises is getting reinforced in the global logistics industry and might lead to the hegemonic control of global SCM(Supply Chain Management)

Korea's market share shows fall

Hanjin Shipping(7th) and HMM(18th) appear to be outnumbered by European companies in terms of the number of total vessels and ultra large vessels and to have comparatively weak global network.

Hanjin and Hyundai's vessel tonnage recorded 92,000 TEUs and 59,000 TEUs each in 1995, which accounted for 47% and 30% compared with top ranked Sea-land. As of Jan. 2012, however, the figure showed mere 19% and 13% each as compared to Maersk.

What is worse, Chinese shipping lines like COSCO and CSCL are making rapid progress with advantages of homeland cargoes and being government enterprises. Korean companies have found themselves in a nut cracker position between Europe and China.

Specialists assert that national shipping lines need to pay attention to M&A that European companies have followed as a growth engine so far. While European enterprises suffering from financial problems are emerging as target of M&A, shipping and logistics area is no exception. It should be recognized that 60~70% of Foreign Direct Investment(FDI) is made through cross-border M&A.

Korea is also actively seeking to foster global logistics enterprises to enter overseas market. Not only international logistics investment fund has been arranged but support to global M&A using exclusive funds is being scheduled. The specialists say that the utilization of traditional institution should be maximized and further, enterprises' competency and awareness have to be also changed in order that such businesses progress favorably.