Moody’s: the integration of industry consolidation is still the main theme Of 2018
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- Time of issue:2020-03-16 10:02
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(Summary description)
Moody’s: the integration of industry consolidation is still the main theme Of 2018
(Summary description)
- Categories:Trade News
- Author:
- Origin:
- Time of issue:2020-03-16 10:02
- Views:
Moody's Investors Service recently released a report predicting that the industry will continue to integrate and develop rapidly whatever by forming alliances or mergers.
Moody's said it expects the company to make choices in various solutions to increase market share and improve efficiency in response to fierce competition and persistent oversupply.
Maria Maslovsky who is the vice President and senior analyst from Moody's group said that the consolidation trend will continue until 2018. The big company will look for opportunities to increase market share while small firms seek to improve efficiency to remain profitable.
Especiaaly the strategic alliances can reduce transaction costs through resource pooling and sharing of customers.It is not necessary to carry a lot of debet.
The analysis figures out that the cabin sharing and alliance integration will help the group to improve efficiency without taking additional debt. These strategies enable shipping companies to concentrate resources to improve efficiency and customer coverage without generating balance sheet influence and transaction risk.
Moody's hopes that shipping companies will continue to establish partnerships and cabin acquisition agreement if possible. Any shipping company that does not participate will possibly to be at a competitive disadvantage. That is because these companies are unlikely to meet the cost-effectiveness required to compete with others. Of course, it won’t influence much on few regional companies.For example, Wanhai Line are focused on specific market and won’t compete with big companies on major trade routes.
Consolidation among the most recent consolidation companies, including the Hapag-Lloyand the SCSA V and the integration of CMACGM and NOL has produced synergies.
Whatever merger and acquisition as well as formation of Alliance,the success of these integrated companies in the future will still require good management and operational Ability. Moody's said it would be an advantage strategy for the shipping industry. If companies were not willing to participate, they would lose their competitiveness.
Moody's said the debt financing influcence to company’s credibility is subject to many factors,Including Company’s strength and the ability to return its indicators to a rating agency's guidance.Moody's said it would take 12 to 18 months.
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