The busy rush to form
shipping line alliances and
takeovers/mergers amongst
the world’s Top 20 container
liner companies on the major
east-west trades has moved
into calmer waters, according
to Alphaliner and articles
appearing in Drewry Container
Insight.
There are numerous
scenarios but it is felt that
consolidation may be in a pause
period now as everything beds
down. It is estimated that the
second half of 2017 will witness
further moves in the march
towards super groups vs niche.
The result of this has been a
reshuffle of alliances, reducing
the previous four groups to
three. And, as the two new
alliances only really start from
Q2/2017, it perhaps puts the
Ocean3 Alliance (formerly 2M)
in a strong position.
Maersk and MSC along with
Hyundai Merchant Marine
(HMM) now form that Ocean3
Alliance. The entire fleet that
these three lines operate totals
1 183 ships with 6 410 073
TEU capacity. This alliance is
already operating.
CMA CGM, China Cosco
Shipping Corporation
(Coscocs), Evergreen Line and
Orient Overseas Container
Line (OOCL) form the Ocean
Alliance, which adds some
non-traditional services – such
as Asia to the Middle East and
India – to the traditional Asia-
Europe, Asia-Mediterranean,
Trans-Pacific, Asia-North
America East Coast and Trans-
Atlantic trades. The lines in this
group operate a total of
1 111 ships with 5 452 879 TEU
capacity. It will also include
APL, a subsidiary of the CMA
CGM group after its takeover
of parent Neptune Orient Lines
Ltd. It is due to be officially
launched in April 2017 after the
various authorities give it the
thumbs up.
MOL, NYK Line, K-Line,
Hanjin Shipping,
Hapag-Lloyd
and Yang Ming
Line form ‘The
Alliance’ covering
all east-west
trade lines. The
group operates
667 ships with
4 045 862 TEU
capacity. The United Arab
Shipping Company (UASC)
will become a member as soon
as its takeover by Hapag Lloyd
is finalised. The five-year term
begins in April 2017 after
regulatory approvals.
The move from four alliances
to three was considered
inevitable, once the mergers
of the container ship fleets of
CMA-CGM/APL and CSCL/
COSCO – when Cosco took over
the China Shipping Container
Lines (CSCL) container ship
fleet to form the China Cosco
Shipping Corporation (Coscocs)
– had taken place.
The Ocean Alliance was
perhaps a reaction to Ocean3
Alliance (2M) scale. And, as
a result of moves from the
previous two other alliances, it
was inevitable a collapse and
then cascade into ‘The Alliance’
would take place.
Of the remaining unattached
shipping lines, there was some
logic for Hamburg Süd to join
‘The Alliance’ given carrier split
and trading areas.
That would still leave Zim,
Pacific International Line (PIL)
and Wan Hai Lines out in the
cold. The remaining three lines
in the global Top 20 – X-Press
Feeders Group, KMTC and
IRISL – are currently not at all
involved in the long-haul eastwest
trades.
Such alliances have taken
on increased
importance
in a global
shipping
industry.
By entering
into such
groupings
– in which
firms share
everything
from ships
to port
operations – companies can
cut operational costs.
Containership operators
say alliances offer better
service through their
combined network
compared to individual
operators. Their shared
resources give cargo owners
more frequent sailings at
the best price, they have
argued.
However, this doesn’t
see them doing away with
the current overcapacity
problem – and its pressures
on lines’ bottom lines – on
these main global trades.
While economies of scale
and the like are factors, it was
noted, the capacity overall
remains and the supply/
demand challenges remain.
Heading for the
big 6?
Looking to the future, the
shipping industry could
see the emergence of six
or seven major lines, and
the potential for these to
pull away and leave a thin
middle ground.
This is seen as being a
scenario where the new
norm to play as a line
operating the east-west
trades is likely to be 1.5
million TEU capacity or
above.
The Top 6 orderbook
(over 2 million TEUs) is
75% of the entire Top 20
orders, hence the ‘unhitch’
potential as they get bigger.
In any further changes
to alliances, three Japanese
lines (or some other
grouping) is one other
combination. There is little
else left.
