Shipping M&A and Cyber Security

Consolidation of maritime container carriers is showing profit, as seen in the capacity to calm freight rates during this extraordinary economic punch due to the world-wide Corona Virus pandemic. This is “fundamentally different” from past shipping calamities when decimated demand always led to a collapse in prices for container shipment, as recently reported by Sea-Intelligence.[1] “The consolidation of the past 20 years seems to finally pay off, in having created the possibility to mitigate the worst impacts of a crisis they otherwise have no control over.” Rates remain stable despite the current virus fallout, as the carriers have shown strength of capacity discipline.

Using data from the China Containerized Freight Index, Sea-Intelligence found that the overall shipping prices so far this year were higher than 2019. Moreover, the rates over the past six-eight weeks, during which container operations were hit by COVID-19, were 11 percent higher compared with the same period in 2019. “Despite the adversity in the market, the carriers have been able to maintain a very high degree of stability in the freight rates,” said the consultancy in its latest report. “This in turn also bodes well for their ability to avoid a catastrophic loss in 2020.”

An earlier forecast of carriers recorded an estimated combined loss of $23bn in 2020, should shippers see the collapse in both volume and rates reach the levels experienced during past downturns. It is speculated that this shortfall will narrow to $800m if the current rates can be maintained. The “smooth sailing” comes as shipping lines continue their efforts in capacity withdrawal amid lower than expected demand. Recently the number of total pandemic-led “void” sailings, recorded by analysts, has reached 435. As a result, capacity on Asia to North America, west coast trade and east coast trade, is expected to drop 20-25 percent in the coming weeks - during which capacity on Asia-Europe services will likely drop by 30 percent.

Many analysts theorize this current supply demand downturn (and it is a big one) will create more consolidation and less shippers all along the supply chain (ships, rail and trucking companies). This will create conditions ripe for mergers and acquisitions (M&A). Why is this important in cyber security? Because this is a time hackers target both M&A companies to steal data flowing back and forth during the M&A negotiations. Then hackers can steal proprietary information and/or create a ransomware scenario. Additionally, why would the purchasing company buy a compromised company? Thus, this places high importance on sound cyber security.

Many analysts, including Red Sky Alliance, urge a proactive approach to cybersecurity for companies looking to take advantage of future M&A possibilities, to avoid unfortunate “surprises.” The first step is to conduct an internal and external audit of potential customers and purchasers. This helps protect a company from any anomalies during the M&A process as well as protecting the purchasing organizations from being completely blindsided by the existing (or lack thereof) cybersecurity program.[2] Red Sky Alliance can offer our support services during an M&A process and provided valuable negative cyber data, derived in the underground, regarding stolen information being sold/shared by cyber criminals. RedXray does not touch a network but scrapes the underground for stolen data or malicious information. This intelligence can then be used to help protect a network, that should already have proper firewalls, monitoring, remediation/mitigation and employee training. Our data fed to an already network protection plan and combined with internal audit results will provide valuable protection and most of all - business piece of mind. Red Sky Alliance is a Cyber Threat Analysis and Intelligence Service organization. For questions, comments or assistance, please contact the lab directly at 1-844-492-7225, or feedback@wapacklabs.com Interested in a RedXray demonstration or subscription to see what we can do for you? Sign up here: https://www.wapacklabs.com/redxray