New ocean cargo carrier alliance is planned

In a widely anticipated move, yet more ocean cargo carrier consolidation was announced in Singapore today.

According to spokesmen for the newly-formed group, “Ocean Alliance,” CMA CGM, COSCO Container Lines, Evergreen Line and Orient Overseas Container Line have signed a memorandum of understanding to form a consortia covering the Asia-Europe, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, transpacific, Asia-North America East Coast, and transatlantic trades.

“This is a milestone agreement among four of the world’s leading container shipping lines,” noted spokesmen, adding that Alliance will have nearly 400 vessels in its container fleet.

Foster Finley, managing director at AlixPartners and co-head of the firm’s maritime practice, told LM that the “long-beleaguered” financial state of the maritime container-shipping industry will likely worsen in 2016.

“The only thing apt to cure the industry’s malaise is further consolidation,” he said.

Other analysts suggest that there may yet be more shifting of alliances if some carriers are to survive. But blending of business cultures may pose some problems.

“On one hand, companies are very different and also have very different cultures,” said Lars Jensen, CEO and partner of SeaIntelligence Consulting in Copenhagen. “On the other hand, the industry demonstrates aspects of a mono-culture which will be challenged in the coming decade.”

As a consequence, Jensen believes carriers will have to concentrate on “a common thread” in the future.

“While the market remains cyclical, the idea of shipping as tradecraft has had its day,” he said.

The proposed new alliance come on the heels of the merger of Cosco and China Shipping’s container lines and CMA CGM’s move to buy Neptune Orient Lines (NOL), where it plans to pull container line APL out from the G6 Alliance.
The 2M Alliance, comprising Maersk and MSC is also being challenged by this move, analysts contend. Also brought into question is the future of Kawasaki Kisen Kaisha (K Line), Yang Ming Line and Hanjin –  all members of the CKYHE alliance.

Pending approval by international regulatory agencies, the Ocean Alliance will commence operations by this time next year.