This week (April 3, 2017) sees the commencement of new alliance structures in the container shipping market. Much of the previous alliance arrangements collapsed in the face of the consolidation and bankruptcy over the past couple of years. So they have been replaced by two newer, larger alliances covering all but the biggest carriers.
The creation of such alliances has, of course, resulted in new service schedules on the larger routes and there is much muttering around the market on how this is going to be disruptive both in terms of service provision and price.
The Ocean Alliance consists of ‘CMA CGM,OOCL, Evergreen and China COSCO Shipping’. The rival ‘THE Alliance’ is made up of Hapag-Lloyd, the new container line composed of the Japanese trio NYK, MOL and K Line, and Yang Ming. Originally Hanjin Shipping was meant to be a member.
It is perceived that the ‘Ocean Alliance’ is the stronger player. For example, the data provider Alphaliner estimates that the ‘Ocean Alliance’ has 35% of the capacity on the Asia-Northern Europe route whilst the ‘THE Alliance’ has 25%.
Of course the rest of the market is the province of the ‘2M’ alliance between the largest container shipping lines, Maersk and MSC. A somewhat different beast, this accounts for 40% of available capacity. This is complicated further by the fact that HMM and Hamburg Sud have attached themselves to the 2M alliance, although very much as junior members.
Overall, the number of alliances has reduced from four – G6, CKYE, 03 and 2M – to three. That said, capacity is more concentrated today than five or ten years ago when the outline of the former alliance structure was created, with the big players having leading market shares. It should be remembered that these alliances do not account for the whole fleets of the companies concerned. The larger lines in particular can put on vessels on routes not covered by the alliances.
One of the implications of the changes is an increase in the average size of vessels available. One of the attractions of alliances is that medium-sized shipping lines find the opportunity to deploy their largest ships. If true, this may suggest that available capacity may also increase.
Source: Transport Intelligence, April 4, 2017
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)