CMA CGM, COSCO Container Lines, Evergreen Line and Orient Overseas Container Line have signed a memorandum of understanding to form a new container alliance reflecting to the existing shipping alliances which will lead to major shifting of partnerships.
The newly formed Ocean Alliance will be covering the Asia-Europe, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, transpacific, Asia-North America East Coast, and transatlantic trades.
The alliance has planned to start at the beginning of April 2017 and will initially cover a 5-years period subject receiving the green light of the various competent authorities.
The deal clearly illustrates a new generation of shipping alliances after the recent merger of COSCO with China Shipping and the CMA CGM agreement with Singaporean’s NOL, Neptune Orient Lines. The container shipping industry is clearly choosing this option in response to a severe downturn in the market over the recent months.
The new partnership will operate a total fleet of 350 container vessels and the deployment of the mutual services will initially include more than 40 worldwide services including approximately 20 services each in the US and Europe related trades.
The four members of the Ocean Alliance are currently spread over three separate alliances. CMA CGM is currently part of the “Ocean Three” alliance in cooperation with China Shipping Group and United Arab Shipping Co, a deal that expires at the end of 2016. COSCO is currently part of the CKYHE alliance that also includes Evergreen.
Huge impact on existing alliances
The formation of the Ocean Alliance will impact the G6 Alliance losing two of its members both APL and OOCL resulting in Hapag Lloyd remaining in partnership with only two Japanese partners, being NYK and MOL together with South Korean Hyundai Merchant Marine.
The green CYKHE Alliance is facing the departure of Cosco and Evergreen, their biggest partners in the alliance. It is expected that the remaining alliance members will combine their forces with UASC who is left behind in the Ocean Three Alliance after the departure of CMA CGM and Cosco
Early rumors state that these 8 remaining carriers could probably form a new alliance strengthening their forces in an attempt to keep their market share.
Based on today’s capacity statistics, the newly Ocean Alliance will have a market share of 34.4% on the trade lane between Europa and Far East, more than the current 2M leaders who have a market share of 33.4%. On the trans-Pacific, CMA CGM, Cosco, Evergreen and OOCL have a 38.6% share while M2 controls only 15.7% capacity on this trade lane. On the Transatlantic routes the situation is different with a 18.2% share for the Ocean Alliance and a 41% share for M2.
Press releases on Ocean Alliance
In a joint press release the newly formed group stated: “This is a milestone agreement among four of the world’s leading container shipping lines,” The statement from the member carriers added: “Shippers will have an attractive selection of frequent departures and direct calls to meet their supply chain needs, including access to a vast network with the largest number of sailings and port rotations connecting markets in Asia, Europe and the United States.”
Rodolphe Saadé, vice president of CMA CGM Group said ““The Ocean Alliance is a very ambitious operational agreement. CMA CGM, and its new partners, will offer more than 40 maritime loops, providing its customers with an enhanced network of services and fast transit times.”