Is a New East-West Shipping Alliance in the Works? - Global Trade Magazine
  March 10th, 2016 | Written by

Is a New East-West Shipping Alliance in the Works?

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  • CMA CGM and China COSCO Shipping are in talks to set up a new carrier partnership.
  • CMA CGM and China COSCO Shipping are trying to recruit Evergreen and OOCL into an alliance.
  • CMA CGM-COSCO alliance could alter the liner shipping landscape and leave eight carriers in the lurch.

A new mega alliance may be in the works. Alphaliner, an ocean shipping information company, is reporting that CMA CGM and China COSCO Shipping are in talks to set up a new carrier partnership.

The two carriers are also trying to recruit Evergreen and OOCL into the alliance, according to Alphaliner.

Other reports indicate that the Islamic Republic of Iran Shipping Lines (IRISL) could also be included in the alliance.

The plan could potentially fracture three of the four main east-west alliances that operate today.

“If successful, the initiative would radically alter the current liner shipping landscape and leave the eight remaining carriers of the Ocean Three, CKYHE, and G6 alliances in the lurch,” said the Alphaliner report.

No definitive plans have yet been announced and discussions appear to still be ongoing.

The alliance shakeup has been brought about in part by merger and acquisition activity on the part of CMA CGM and COSCO. CMA CGM is in the process of acquiring Neptune Orient Lines and its container carrier APL in a deal that is expected to close in the second half of this year. COSCO has merged with China Shipping in a deal that was just recently finalized.

COSCO belongs to the CKYHE Alliance, China Shipping to the Ocean Three Alliance, and APL to the G6 Alliance. CMA CGM has already announced it will pull out of the G6, once its merger with APL is complete.

COSCO has yet to announce any alliance following the acquisition of China Shipping’s container operations, but industry speculation indicates that it will pull out of the G3.

Evergreen recently emerged from a mourning period following the death of its founder Chang Yung-Fa and has yet to announce any plans with regard to alliances.

OOCL met with CMA CGM and COSCO in late January and, according to Alphaliner, is still mulling its options.

“While the new alliance’s final composition could still change,” Alphaliner concluded, “the driving factor behind the proposed four-carrier setup is clear: to from a strong and stable alliance that could challenge the 2Ms [the Maersk Line and Mediterranean Shipping Co. alliance] dominance in the east-west trades and to distance the CCEO from some of the weaker partners within the current alliances, which could be facing financial distress.”

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