OCEAN Alliance quell rumours

Sending a clear message of stability, after Hapag Lloyd’s defection, the four remaining carriers in the OCEAN Alliance have formally agreed the continuation of their alliance until at least 31st March 2032.

Founded in 2017 under a 10-year deal, the liner grouping comprised of CMA CGM, Cosco Shipping, Evergreen and OOCL has agreed to continue their vessel-sharing agreement until the end of March 2032, with their respective CEO’s joining a signing ceremony in Shanghai on the 27th February.

Although there was market speculation that a member of the OCEAN Alliance might be tempted to leave and join THE Alliance in 2027, the Shanghai agreement makes it very unlikely this decade.

With the Gemini Cooperation and OCEAN Alliance confirmed, it leaves just MSC and THE Alliance (THEA) members ONE, YangMing and HMM to confirm their intentions.

OCEAN Alliance will have the greatest number of east-west trade loops, with 40 across its network, followed by Gemini with 21, THEA with 19 and MSC with 15.

Everyone’s expectation is that MSC have the scale to largely go it alone and the freedom of not having to compromise with partners should give them flexibility, which could be leverage to create a strategic advantage.

With 12 ‘hub-and-spoke’ terminals in Asia, EMEA, North and South America, the Gemini Cooperation will clearly have fewer direct port-port combinations and ensuring the terminals manage high port calls, big exchanges and yard pressure is going to be very challenging and If they don’t get it right, they will be in trouble.

So ONE, YangMing and HMM might leverage their size by refining their network design to fit market niches and could consider competing with direct port-port calls for shippers that want to avoid transhipments.

There is speculation that Wan Hai, with its fleet of 18 neo-panamax ships, may join the THEA but sceptics doubt they will plug the gap left by Hapag, who’s fleet recently passed 2Mteu for the first time.

However, contrary to popular belief, Hapag-Lloyd is not the biggest tonnage contributor in THEA: the Hamburg-based carrier brings in 26% of all alliance capacity, which compares to 39% for ONE, 18% for Yang Ming and 17% for HMM.

THEA may decide to extend alliance cooperation beyond their east-west partnership and move into the Intra-Asia, Middle East and African markets, but whichever route they choose, the pressure is clearly on ONE, HMM and YangMing.

If you have any questions or concerns about the alliance changes, or would like to discuss their impact on east-west shipping, please EMAIL Colin Redman.