The Container Company

I was surprised to read in the Financial Times (http://www.ft.com/cms/s/0/59266e48-b8ef-11de-98ee-00144feab49a.html) that John Fredriksen is planning on investing in a new 'low cost' container shipping company. Surprised because Mr Fredriksen has a reputation as an astute investor. Container shipping and profitability are uncommon bedfellows. The same can be said for the majority of the airline industry. The exception to this being the 'low cost' airline sector. This apparently is at least part of the rationale of this new container shipping venture which is to be called The Container Company. Direct point-to-point services rather than the 'hub-and-spoke' system employed by the large container shipping companies. However, the parallel dries up there. The low cost airline model also relies on stripping extras such as food and having a route structure that allows an aircraft to be utilised for 11+ hours a day on short sectors (typically no more than 1.5 hours).

I'm not sure how much of a cost advantage this new venture will be able to realise even allowing for the abundance of cheap ships in the early years. The industry won't be thanking Fredriksen for bringing the excess capacity back into the market. Perhaps the best place for these ships is with the cows.