Taking over the global supply chain through vertical integration is not something that happens overnight. It is a process with many steps, including strategic acquisitions such as the latest ones concluded by shipping hegemons MSC in Australia and Cosco in Germany.
Cosco, which is a Chinese state-owned entity, acquired 80% of the shares of Konrad Zippel Spediteur, a German intermodal operator active with rail connections between the ports of Hamburg and Bremerhaven and Berlin, Leipzig and Schkopau. Moreover, the company deploys its own trucks for first and last-mile deliveries, and can provide storage for containers and general cargo.
Cosco’s presence in the Hamburg area has increased over the past few years. For example, the company became a minority shareholder of the Container Terminal Tollerort (CTT), one of the main terminals at Europe’s third largest port. The agreement, which saw Cosco acquiring 24,99% of the CTT shares, was finalised in June 2023 after a nine-month negotiation.
MSC and Seaway
The Switzerland-based shipping giant is continuing its expansion in the land down under. Through its logistics subsidiary Medlog, MSC acquired Seaway’s intermodal division, which provides rail, road and warehousing services, moving over 400 trains of up to 1,5 kilometre in length per year. The company is most active in the state of Victoria (where Melbourne is), in the southeast of Australia. Other than this acquisition, MSC expanded its presence in Australia by opening a brand new terminal in Minto, a few kilometres south of Sydney in New South Wales.
A sport for few
The trend of large shipping lines expanding into the intermodal world to control an even larger slice of the supply chain has been rapidly intensifying these past few years. Whether it is buying assets or building them from scratch, MSC, Cosco, Maersk and CMA CGM are all looking to increase their power and create an oligopoly.
As is often the case, this trend causes the most various reactions. Those who see it as a positive development highlight how such big players are able to carry out larger investments in much shorter times. This, on paper, should create the perfect environment for efficient progress. On the other hand, having just a handful of companies controlling the global supply chain might come with a few negatives as well.
For example, they would have unprecedented freedom in moving goods around the world with few checks and balances. Moreover, a recent study from KPMG pointed out that vertical integration is contributing to an uneven playing field where smaller entities struggle while the big sharks thrive. What is certain is that these companies are not going to stop their expansions, with all the consequences that this brings.