Study Suggests Threat of Bankruptcy for Container-Shipping Industry

A partner at O’Melveny and Myers, LLP, Suzzanne Uhland has over 20 years of legal experience. At her firm, Suzzanne Uhland concentrates on bankruptcy litigation in variety of industries, including shipping.

According to a recent study, container-shipping companies are facing turbulent industry conditions that put many of them at risk of bankruptcy. The study by AlixPartners, a business advisory firm, found that the industry’s poor economic cycles have grown more frequent and more severe since 2010. While shipping carriers have extensive experience weathering financial hurdles, the study suggests that continuous overbuilding and over-leveraging has resulted in potential long-term economic consequences.

Carrier reliability consistently fell in 2013, and trans-Pacific carriers are meeting shipping deadlines at historic lows. With a growing number of unhappy customers, shipping companies are unable to maintain rate increases, and the top 15 container companies lost approximately $1.1 billion over the last five years. The study concludes that a lack of protracted recovery periods has depleted shipping company finances and increased the risk of financial crisis.