What you need to know about the alliance of shipping lines and the changes in the shipping industry 2023
In the shipping industry, low prices and a wide range of services are two important factors that carriers must meet in order for their business to be profitable. To facilitate this, three major shipping alliances (2M, THE Alliance and Ocean Alliance) were formed. By forming alliances, carriers were able to increase their customer base globally and offer low prices.
Recently, two major carriers, Maersk and MSC, have called off their 2M alliance after 7 years of cooperation. Under the terms of the agreement, it will completely separate all of its operations by 2025.
Maersk and MSC have large customer bases and, of course, customers are worried about how this outage will affect them. However, both carriers assured that the dissolution would not have an immediate impact on their services.
What are shipping alliances?
A shipping alliance, commonly known as a shipping alliance, is a group of shipping lines that come together to create a partnership agreement. The Agreement covers a number of trade routes through cooperation between members on a global scale.
What are the benefits of shipping alliances?
Shipping alliances help carriers pool their resources and increase their customer base.
For starters, shipping alliances can help carriers facilitate low rates and a wide range of services. With increasing competition among leading shipping lines, customers can benefit from getting better services and lower shipping rates.
Three major shipping alliances
| Major Shipping Alliances 2023 | ||
| Details of alliance | Members | Details of alliance |
| 2M | MSC, Maersk | Formed in 2015 with the aim of ensuring competitive and cost-efficient operations. The alliance has come to an end and will discontinue by 2025. |
| Ocean Alliance | CMA-CGM, Cosco Group, OOCL và Evergreen | Formed in 2017 and renewed for 10 years ending in 2027. The alliance has 330 ships, out of which 111 ships are operated by CMA CGM. The alliance has a capacity of 3.8 million TEUs. |
| THE Alliance | Hapag Lloyd, NYK, Yang Ming, MOL, K-Line, HMM | Also launched in 2017, THE Alliance has 241 ships calling more than 1150 ports and covering 3.3 million TEUs. |
The three major shipping alliances include the top 10 shipping lines. Here is an overview of these alliances
The end of the 2M alliance and its impact
In January 2023,Maersk and MSC jointly announced that they will terminate the alliance in 2025. The 2M agreement has a minimum term of 10 years with a 2-year notice period of termination. 2M’s termination announcement could signal the beginning of a broad restructuring of existing operating contracts across the industry, particularly on key east-west trade routes.
According to the announcement, “The discontinuation of the 2M alliance paves the way for both companies to continue pursuing their own strategies.” Experts say that Maersk is looking to become an end-to-end logistics service provider. On the other hand, MSC wants to expand their operations as a shipping company. For this purpose, MSC has purchased 271 second-hand vessels since August 2020, with a capacity of just over 1 million TEU.
So how does this shutdown affect other industries in the shipping industry? Since both companies together control about a third of the world’s container capacity and independently have more than 4 million TEUs, it is certain to make some impact.
First, it will create more competition between Maersk and MSC. As a freight forwarder, you can expect to see a drop in freight rates, as both companies will compete more directly with each other on the Eurasian, Transatlantic, and Transpacific routes.
Similarly, Maersk or MSC customers may also see some positive changes in the services offered in the coming years to retain and attract more customers.
Experts also think that both companies will have to strengthen their oceanic fleets to meet the needs of customers and ensure smooth transportation of goods.
Reported by KYLIE @WeDo 2023-03-03
