They just keep coming

All shippers must be mindful of how these new alliances might impact their service agreements as they start planning for the 2015 negotiating season.    The world’s leading container carriers should be recognized for their fighting spirit when it comes to forging new and more powerful alliances among themselves.
   Earlier this year all shipper eyes were on the formerly proposed powerful P3 Network – then consisting of Maersk Line, Mediterranean Shipping Co., and CMA CGM – which promised a vessel-sharing agreement between these titans in the three major east-west trades – Asia-Europe, transpacific and transatlantic. U.S. and EU regulators approved the alliance, but China shut it down based on its concern of the centralized operations center and commercial control put forth by the P3 members. Some shippers’ associations, particularly in Europe and Asia, breathed a sigh of relief, worried the Big 3 of liner shipping would constrain capacity and drive up freight transportation rates in their respective trades.
   But like well-trained boxers in the ring, the liner carriers have quickly gotten back up on their feet and are now ready for round two with even more alliance proposals for shippers to comprehend.
   In late August, Maersk and MSC said they plan to initially operate 97 ships ranging in size from 4,000 to 13,000 TEUs in the 2M vessel-sharing agreement on trades to and from the United States, but may eventually operate up to 130 ships with capacities of 19,200 TEUs. The carriers said they also would terminate five space-sharing agreements which they either jointly or separately had with CMA CGM “at the earliest possible date consistent with their terms.”
   CMA CGM responded by announcing on Sept. 9 that it signed agreements to form a container shipping alliance with China Shipping Container Lines and United Arab Shipping Co.
   Under the name “Ocean Three,” the companies have entered into a combination of vessel-sharing, slot-exchange and slot-charter agreements on the Asia-Europe, Asia-Mediterranean, transpacific and Asia-U.S. East Coast trades.
   As stated in a BlueWater Reporting analysis released on the day of the Ocean Three announcement, the three liner carriers will be better off working together to fill their new 18,000-TEU ships than working alone.
   The other two large vessel-sharing agreements among container carriers are the G6 and CKYHE.
   However, these new alliances aren’t revolutionary in terms of their structure. They’re just bigger than before – like the mega-containerships the carriers are now operating. 
   These new alliances should, in theory, benefit American shippers by providing broader port coverage and a wider array of services, but some shipper groups remain wary. In any case, the impact of the 2M and Ocean Three agreements are likely to be more keenly felt on the Asia-Europe trade, where these two groupings have a larger percentage of deployed capacity than on the transpacific. Either way, all shippers must be mindful of how these new alliances might impact their service agreements as they start planning for the 2015 negotiating season.

This editorial was published in the October 2014 issue of American Shipper.