We started 2016 with four global shipping alliances made up of 16 different carriers. By mid 2017 there will be only three main global alliances comprising 12 carriers at the most.
The impact of the Hanjin Shipping impact is still reverberating. Capacity continues to be an issue on many routes and initial rate spikes have not yet been reversed.
Against this background of uncertainty the shipping lines have been busy with yet more mergers, takeovers and alliance building.
Experts predict that by mid 2017 there will be only three main global alliances comprising 12 carriers at the most, thanks to collapses, mergers and takeovers.
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We protect our customers by contracting across alliances, not carriers, to manage supply chain risk, which is why it’s important to understand the composition of these alliances.
Alliance carriers share vessels, which means that booking with two different carriers does not guarantee that you’re actually shipping on two different vessels.Order Xanax From Mexico
Alliances often provide access to far greater geographic coverage and you may be able to arrange for additional sailings from your carrier because they have access to other vessels within the alliance.
Even before the Hanjin Shipping collapse, mergers, acquisitions and new alliances have moved ahead at a breathtaking pace in the search for economies of scale and ever lower operating costs.
That same desire to lower costs was also a key factor in the huge investments in mega containerships of 18,000 TEU and upwards, which has meant that the supply of container capacity has grown rapidly, while the sluggish global economy has depressed demand.
This has meant record low freight rates for shippers, but it also makes it tough for container lines to make a return on their investments.
The starting point for all these realignments was the proposal by the three largest container lines – Maersk Line, Mediterranean Shipping Company (MSC) and CMA CGM – to form a new global alliance which was set to last a decade. However, this planned P3 Alliance came unstuck when it was blocked by competition authorities in China in 2014.Cheap Xanax Bars
Instead, Maersk Line and MSC joined forces and established the 2M Alliance. Then, later in 2014, CMA CGM, China Shipping Container Lines and United Arab Shipping Company unveiled the Ocean Three Alliance.
All quiet? Not for long! This year we have seen CMA CGM take over NOL, owner of the container line APL; the merger of China’s two largest shipping conglomerates, China Ocean Shipping Company (COSCO) and China Shipping (Group) Company, to form China Cosco; and a proposed merger, currently moving ahead, between Hapag-Lloyd and UASC.
A new Ocean Alliance has been announced, bringing together CMA CGM, China Cosco Shipping, Evergreen Line and OOCL, bringing an end to the Ocean 3 Alliance, while also taking members away from the G6 and CKYHE alliances.
That left eight lines and it wasn’t long before Hapag-Lloyd, Hanjin Shipping, NYK, K Line, MOL and Yang Ming were to establish THE Alliance.
But the ink on this latest agreement wasn’t even dry before Hanjin’s spectacular fall, throwing THE Alliance into chaos and leaving UASC and Hyundai in limbo.
In the final – and most orderly – twist; K Line, MOL and NYK have agreed to merge their shipping businesses to create a joint-venture with a total capacity of 1.4m teu and a market share of 7%, which will make them the sixth largest global carrier.
Does all this consolidation mean that we are slowly moving back towards the conference system?
The Global Shippers’ Forum have already voiced concerns that the consolidation of the container shipping market is creating “real potential competition issues” because independent carriers may be forced out of the market by new super alliances controlling major trade lanes.