The duel of the giants begins
The second quarter of 2017 is expected to reveal a new structure in global container shipping. But will it result in real change?
The classic duel is a competition in and of its own right, in which the bigg est of the biggies go head to head. For the alliances in the container shipping industry, a trend is set to continue in 2017 that has already heralded a new age this year.
As the Copenhagen-based consultancy SeaIntel has shown, the trend already began 20 years with names such as the Global Alliance, the Grand Alliance or Tricon, which still resonate today. As recently as 2010, however, the GA, CKYH and NWA alliances had capacities of 2.7 million teu, that is 29% at the maximum of the available containership volumes. Since 2016, the four alliances 2M, G6, CKYHE and O3 represent more than 76% of vessels, with capacities of around 15.6 million teu. If the maritime shipping’s situation were not what it is one could speak of an oligopoly.
As far as the oceans reach
In 2017 the options on offer will be reduced to just three alliances. The 2M association, which consists of Maersk and MSC, is negotiating with HMM, but it remains unclear whether the South Koreans will become involved from 2017 onwards.
The members of the Ocean Alliance, in turn, that is Cosco Container Lines, CMA CGM, Evergreen Line and Orient Overseas Container Line, have published their planned network of services with the corresponding port rotations. In its so-called “day one network” the Ocean Alliance will deploy 350 container vessels with an estimated capacity to carry 3.5 million teu.
The Ocean Alliance provides a clear focus, with 20 trans-Pacific services, of which 13 sail from Asia to the west coast of North America, and seven services from Asia to the east coast of North America, including the Gulf of Mexico. In addition, six services are being launched from Asia to Europe, five to the Middle East and two to the Red Sea. Three trans-Atlantic services top off the range on offer. The Ocean Alliance will become operational on 1 April 2017.
The Alliance follows suit
Only five days after the Ocean Alliance announced its plans, The Alliance followed. Three Japanese lines, K Line, MOL and NYK, whose joint venture in container transport is scheduled to enter into effect in mid-2017, are cooperating with Yang Ming and Hapag-Lloyd, which is currently integrating UASC. Here, it will be 16 trans-Pacific services and eight on Asia–Europe routes, of which three will serve the Mediterranean. A loop will connect the ports of the Mediterranean with the Far East. Hanjin line, originally involved in the process as a partner, is no longer included in plans.
We distinguish between African and Indian elephants, with the former the larger. The difference in size of approximately one third will benefit the Ocean Alliance in 2017. However, the outlook for freight rates in 2017 is not such that a fundamental change in the situation can be expected. This will depend on the shippers.