Lately, container articles have been dominated by breaking news coming from years of supply chain disruptions due to global incidents and occurrences. Today we would like to focus again on a piece of “normal” shipping news that is slowly transforming the market, shipping alliances.
Last year MSC and Maersk announced the end of their collaboration known as 2M. As expected this event started a domino effect, the main actors were once again available in the market and free to join new agreements.
Earlier this year in January, Gemini was announced with a new European coalition formed by Maersk and Hapag-Lloyd. On the other hand, the Ocean Alliance formed by CMA-CGM, COSCO, and Evergreen decided to extend the agreement for another 5 years, bringing the expiration date to 2032, and leaving the remaining carriers in a complicated situation.
To figure out the remaining options, we need to have a look at the data at our disposal, in particular looking at the current Alliances shape. Often the calculation of Alliances’ capacity is misleading since simply summing up the capacity of all the participants. However, even if this approach may give an idea of the impact of such an alliance on the market, on the other hand, it does not reflect reality since such agreements include a limited number of vessels and capacity.
The Table below shows the comparison between the confirmed alliances volumes – Gemini and Ocean Alliance- and the remaining carriers’ capacity which includes their entire fleet (MSC and THE Alliance carriers).
THE Alliance appears to be the most vulnerable after Hapag decided to join Maersk starting in 2025. The remaining members’ combined entire fleet (3.3 million TEUs) would not even exceed the other alliance agreements in place, making this combination the least competitive on the market.
On the other side of the table, with its 5+ million TEU fleet, MSC alone have enough capacity to avoid any agreements thanks to its astonishing purchasing history of the last years. However, would this be the best choice? Geopolitical instabilities showed how the supply chain constantly risks being affected in terms of services and costs, Covid and the Red Sea crisis are clear examples of such disruptions. Even with a huge fleet, an alliance could be vital to face similar events without affecting MSC services. Moreover, four different forces (MSC, THEA, Ocean Alliance and Gemini) competing in the same trades could strongly minimize the rise of freight rates.
Considering the above aspects, MSC could still operate alone, leaving THEA with no other choice but to keep its current shape and consider convincing Wan Hai or ZIM (currently in a VSA with MSC, and facing trouble joining Alliances due to the current Palestinian conflict) to join the agreement, even if this would not be enough in terms of competitiveness if compared to the other actors.
The decision now comes down to MSC and ONE strategy, to be defined during 2024 and probably revealed before 2025. As the biggest member of THEA, ONE might not accept being kept on the side of the new Alliances reshape, and rumours might suggest a potential discussion with MSC in case the Italian/Swiss carrier would consider the creation of a new alliance characterized by its strength and dominance.
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