Smaller Carriers Could Form Third Alliance

As regulators review the proposed CMA CGM-COSCO Ocean Alliance, Alphaliner reports that the carriers left out of the arrangement are contemplating a new "third force" alliance intended to improve the smaller operators’ ability to compete.  

The Ocean Alliance would pull key carrier members out of the existing Ocean Three, CKYHE and G6 alliances. Analysts estimate that Ocean Alliance, which would comprise heavyweights CMA CGM and COSCO, plus Evergreen Line, APL and OOCL, would have a combined market share of 35 percent of Asia-Europe and nearly 40 percent of Asia-North America – giving it pole position on both of the busy trade routes when it begins operation in April 2017, contingent on regulatory approval in the U.S. and EU.

The formation of the Ocean Alliance would leave behind Mitsui OSK Lines, Hapag Lloyd, NYK, K Line, Yang Ming, HMM, UASC and Hamburg Sud. Alphaliner reports that if ongoing talks between these smaller carriers proceed successfully, they could create a "serious counterweight" to Ocean Alliance and 2M – especially since their members expect delivery of significant ULCV tonnage in the near future, which could be pooled to lower costs. 

An alliance shakeup has been expected since news broke late last year of the merger between China Shipping and Cosco and the purchase of NOL by CMA CGM. Drewry expects that by next year, there will be three alliances with 13 or fewer carriers – but it is not sanguine on the probability that all eight of the smaller carriers join together, especially since HMM is undergoing restructuring negotiations with its creditors. They are more likely to form a smaller group, with non-participating lines engaging in limited vessel sharing agreements with the larger alliances on a route-by-route basis, Drewry says.