The Ocean Shipping Alliance Merry-Go-Round
In late April four carriers—CMA CGM, COSCO Container Lines, Evergreen Line, and OOCL—announced the creation of the OCEAN Alliance, to become operational from April 2017, subject to regulatory approval.
In a recent report, the global maritime consultancy Drewry, analyzed the position of the carriers left in the three alliances that these four are abandoning.
The OCEAN Alliance, initially for a period of five years, will cover more than 40 services in the Asia-Europe, transpacific, transatlantic, and Asia-Middle East and Red Sea trades.
According to Drewry, the OCEAN Alliance will take over as the largest carrier on the transpacific with a share of just under 36 percent, while in Asia-North Europe it will be a close second to the 2M Alliance with a capacity share of 31 percent. The 2M carriers, Maersk Line and MSC, currently dominate the Asia-North Europe market with a capacity share of 36 percent.
As for the carriers being left behind, there are indications they are looking into new combinations.
The day after the OCEAN announcement, Hapag-Lloyd of G6 confirmed that it is in talks with UASC of Ocean Three about “forms of cooperation” which could include combining their container shipping operations.”
Drewry’s analysis shows that a combined Hapag-Lloyd/UASC would control a 7.6-percent share of the Asia-North Europe market and 6.5 percent of the transpacific. “To compete with 2M and OCEAN in those routes they would need to bring in other carriers,” the Drewry report notes.
Were all eight of the orphan lines to join together into a third alliance they would be a match for 2M and OCEAN in both Asia-North Europe and transpacific. But Drewry doubts all eight will agree to a new integrated alliance, “because they have very varied interests….It is more likely that some could form a looser, smaller alliance…”
At the beginning of 2016, there were four global alliances comprising 16 different carriers. By mid-2017, Drewry expects that there will be three main global alliances comprising 13 carriers, following one or more mergers, one or more takeovers, and a possible carrier failure. “In other words,” the report concluded, “the structural industry change is about fewer, larger alliances comprising fewer, generally larger carriers than ever before.”
The OCEAN Alliance will allow its members to compete with 2M in the major east-west trades. “Those left behind,” Drewry concluded, “will need to move quickly to find new partners or risk becoming uncompetitive also-rans.”
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