Big Carrier Alliance Shake-Up is Coming!
With the merger of China Cosco Group and China Shipping Group creating the shipping leviathan China Cosco Shipping Corporation Limited, changes are going to ripple across the entire international shipping industry.
Why?
Because of carrier alliances.
In order to be more efficient and attempt to be profitable in the tough international shipping industry, carriers or shipping lines have formed ship operating alliances. You can learn all about carrier alliances in previous blogs:
How Will Carrier Alliances Behave in the 2015 Shipping Market?
Carrier Alliances’ Impact on 2015 International Shipping
CMA CGM Forms Ocean Three Alliance with UASC & China Shipping
Maersk & MSC Replace P3 Network with 2M Vessel Sharing Agreement
Shipping Industry Fallout from the Failed P3 Network
Carrier Craziness Bracket! International Shipping Alliance Overview
Carving Carrier Competition: Cosco & China Shipping Form Alliance
It took a while for carrier alliances to settle into their current form, as can be seen through the scribbles and changes to the bracket.
The biggest shake-up that happened with the alliances was when the P3 Network between Maersk, MSC, and CMA CGM failed to get approval from China and was scrapped. The carriers quickly scrambled into the 2M Alliance between Maersk and MSC and the Ocean Three Alliance CMA CGM, UASC, and China Shipping Co.
The shake-up about to happen in the wake of the merger between China Shipping and COSCO is likely to blow the P3 reshuffling out of the water.
Since China Shipping belongs to the Ocean Three and COSCO belongs to the CKYHE, China Cosco Shipping would bridge the two major alliances. No one thinks that will be allowed to stand.
It is believed that China Cosco Shipping will then forge a new shipping alliance. That new alliance could change or break apart any or all of the existing alliances.
The real question is which shipping line(s) will join with China Cosco Shipping.
There are many rumors and speculations floating about, but one of the top contenders is CMA CGM.
The Wall Street Journal reports:
CMA CGM SA, close to completing the acquisition of Neptune Orient Lines Ltd., may abandon its operating alliances with other carriers amid growing consolidation in the container shipping business spurred by the global trade downturn.
“We are becoming a larger shipping line and we are in the position to select the partners with whom we want to do business,” said Rodolphe Saadé, vice chairman of CMA CGM, the world’s third-largest container ship operator.
Mr. Saadé said the Ocean Three alliance agreement was set to run for two years, and will end at the end of 2016.
Regardless of the giant Chinese shipping lines merging, it looks as though CMA CGM was prepared to move on from the Ocean Three Alliance. That alone would make big waves across the international shipping industry.
According to Lloyd’s List:
A potential new giant alliance that would include the new Cosco, CMA CGM, Evergreen and others could be in the offing, with reported talks underway.
China Cosco Shipping with the now even larger CMA CGM and Evergreen would be a massive alliance that could give Maersk and MSC motivation to align with another carrier to form an alliance even larger than their 2M Alliance.
Of course, Maersk or MSC might try to get ahead of the game by joining China Cosco Shipping itself. And don’t think the shipping lines are not also in talks with CMA CGM. Let’s not forget that CMA CGM was part of the P3 Network with Maersk and MSC before it was broken up.
Rodolphe Saadé reminds us of how any carrier could join up with any other shipping line in that Wall Street Journal article with:
“There are many rumors in the market about who we are talking to,” he said. “In our industry everybody talks to everybody.”
If Evergreen does join CMA CGM and China Cosco Shipping as rumor would have us believe, that would, of course, affect the CKYHE Alliance that it is a part of.
Would the CKYHE Alliance just revert back to the CKYH Alliance or would they seek another carrier to join in order to replace the lost market share of capacity from Evergreen leaving?
Oh what a tangled web carrier alliances have weaved. And an unwraveling is coming. The big players will be weaving new alliances carefully. But which carriers will be left dangling?
Source: UC Blog
