Shifting alliances in the global shipping sector

The international shipping sector is to see some major changes in the coming weeks with new alliances emerging.

From April 2017, global shipping will experience a major shake-up which, once the dust has settled, will see the domination of three powerful shipping alliances with a combined 88% market share.

These alliances - THE Alliance (Hapag Lloyd, K-Line, MOL, NYK Line, Yang Ming), Ocean Alliance (CMA-CGM, Cosco Shipping, Evergreen Line, Orient Overseas Container Line) and 2M (Maersk, Mediterranean Shipping Line, and Hamburg Sud - recently sold to Maersk) look set to herald a period of chaos as the lines get their ships in the right place for the schedules, coupled with further rate instability in the short and medium term.

Almost all of the world's shipping companies belong to an alliance. With the 'new order' in place, Ocean Alliance will account for 40% of market share, THE Alliance 27% and 2M & Hyundai Merchant Marine 21%. Members of THE Alliance have signed a five-year agreement and combined, offer approximately 3.5 million TEU.

What once seemed certain, that the move towards mega ports and mega ships would continue, now seems less inevitable. According to SeaIntel Consulting, while vessel consolidation creates equal alliances, it also exposes operational inefficiencies for the major east-west trade routes. Vessels of 14,000-TEU capacity are a 'good size', vessels of 18,000 - 20,000 TEUs are in a 'grey zone' due to the difficulty that carriers are having in filling them, while megaships (25,000-TEU capacity) are 'bad' for carriers.

Does this herald a change in the wind? Securing good rates with space commitment in these uneven times using a freight agent who understands such nuances is a prerequisite to gaining value within your Supply Chain.

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