Family moves at top of MSC

Gianluigi Aponte has finally retired as President and CEO of Mediterranean Shipping Company (MSC). Starting in 1970 with just one second hand vessel, he created what is presently the second largest container shipping line. His successor will be his son, Diego.

The family based nature of MSC’s senior management is neither a surprise nor unique. Most of its rivals are, or have been dominated by founding families. The influence of the Moller family at A.P.Moller-Maersk and the Saade family at CMA CGM may have been moderated over the past few years, however they remain central to these businesses. Many of the other largest container lines also remain wholly or partly owned by families of their founders.

This explains a lot about the nature of the container shipping sector. These companies manage their business in a very different way than publicly quoted companies, focusing on market share rather than return on capital invested. That this continues to apply is possibly reflected in the contrast between the recent experience of MSC and A.P. Moller Maersk.

For the Danish giant has taken a new direction under the leadership of Nils Andersen, the first CEO from outside the company. Balancing the more profitable oil and terminals business alongside the traditional shipping operation, it has also focused on improving the quality of its returns on its shipping assets rather than just expanding the size its fleet.

The situation at MSC is hard to compare as it releases so little information, however it appears to be focussed on the traditional objective of expanding its fleet and consequently its market-share. If the information released by AlphaLiner is correct MSC will overtake Maersk as the largest fleet of container vessels due to having ships with over 600,000 TEU of capacity on order. What its returns are like on this huge asset base is unknown however the aggression with which it is expanding it suggests that its traditional focus on relative size and market-share is unchanged.

The implications of this for the container market are strong. Shipping lines who are willing to forgo higher returns in the short-term in order to gain market-share in terms of volume will continue to provide a stream of capacity into the market with the likelihood that prices will be driven downwards. This has been the dynamic of the sector over the past several decades and it looks unlikely to change just yet.