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3rd Major Shipping Alliance to be Announced

Following meetings with at least one U.S. federal regulator on Wednesday, the JOC reports that a third key shipping alliance could be announced very soon – Although the agreement would still need to be approved not only by U.S. regulators but also by the European Union and China. Following April’s announcement of the Ocean Alliance including CMA CGM, China Cosco Shipping, Evergreen Line and Orient Overseas Container, it’s up to speculation which carriers not in that alliance or the 2M tie-up of Maersk Line and Mediterranean Shipping Co., are looking for new partners.

The partnerships have permitted shippers to pool their bigger vessels with the goal that they can better fill their boats and pick up the more prominent economies of scale that mega ships give. However, the formation of the Ocean Alliances left eight container lines in a lurch –

United Arab Shipping Co. lost its two partners in the Ocean Three, CMA CGM and China Shipping, to the Ocean Alliance; the G6 will lose APL and OOCL to the new alliance, leaving the G6 with Hapag-Lloyd, Hyundai and Japanese carriers MOL and NYK Line. If the Ocean Alliance takes effect, the CKYHE will lose Cosco and Evergreen, leaving Japan’s third carrier, “K” Line, along with Taiwan’s Yang Ming and Hanjin as the remaining members.

The main question is whether these carriers will make their way into a partnership, a lack of an alliance could lead instead to mergers or a focus on regional trades rather than the three main east-west trading routes: Asia-Europe, the trans-Atlantic and trans-Pacific. Shipping agreements are especially important for transporters contending in the Asia-Europe trade, which has been set apart by profound spot rate decreases. Here, Ocean Alliance would control about 35% of capacity, in contrast to 2M’s 33.4%, as indicated by research firm Alphaliner. In the trans-Pacific, Ocean Alliance would control 28.9% of capacity, while the 2M right now controls 15.9%.

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