Retail group Lidl proceeds with developing its container business venture by announcing a new head of the division, who joins with 20 years of experience from ship management. Industry sources predict a difficult start for the new venture, according to German media.
German retail chain Lidl has taken another step toward establishing its own container carrier.
Peter Grönwoldt has been anointed division head of international logistics and of the supermarket giant’s upcoming container carrier, Tailwind Shipping Lines, which, according to plan, will initiate sailings between Asia and Europe this summer.
According to his LinkedIn profile, Grönwoldt comes from a position as associate director at insurance broker Willis Towers Watson, in which he has worked since January this year following 20 years at ship management company Harren & Partner. There, he finished as managing director.
Lidl’s decision to launch its own carrier is a result of the last two years’ high freight rates and global supply chain bottlenecks. According to analyst firm Alphaliner, Tailwind Shipping Lines has chartered three ships and bought a fourth. The chartered vessels are two sister ships of 4,957 teu each and one ship of 3,868 teu. The vessels are owned by Reederei Tamke and Peter Doehle.
Media reports indicate that Lidl has purchased a vessel of 5,527 teu from Peter Doehle as well.
According to German media Deutsche Verkehrs-Zeitung (DVZ), industry observers are sceptic regarding Lidl’s chances of success with its new endeavor.
Sky-high prices
Among other reasons, DVZ’s sources highlight that Lidl has chartered and bought its ships at a time when rates and vessel prices are high, while the liner companies that Lidl’s carrier will compete with typically have acquired and chartered their ships at lower prices.
Reportedly, Lidl has paid USD 109m for a 17-year old container ship, Talassa, of 5,500 teu. The price is in accordance with the current market level, which, however, is sky high, prompting doubts regarding Lidl ships’ competitive abilities when the market turns.
Furthermore, according to DVZ’s sources, Lidl is not in itself able to utilize the ships’ capacity, and the retail group thus depends on others buying the remaining capacity.
Lidl is believed to import between 700 and 1,000 teu every week from Asia, but the capacity of the ships is four times as much, meaning Lidl has to sell the remaining capacity in order to fully utilize the vessels.
