Immediate disruption following the launch of the Ocean Alliance and THE Alliance seems inevitable, according to shipping consultant Drewry.
Both the Ocean Alliance, which includes CMA CGM, COSCO Container Lines, Evergreen Line and Orient Overseas Container Line (OOCL), and THE Alliance, which consists of Hapag-Lloyd, NYK Line, MOL, “K” Line and Yang Ming Line, will launch on April 1 this year.
According to Drewry, a number of ports have yet to be formally assigned to new services, at least publically, which would make it very difficult for ports and terminals to properly plan their future workloads.
Additionally, while ports and terminals might indeed have better knowledge than what is publicly available of the finished alliances’ products, other important stakeholders in the supply chain “are still very much in the dark”.
These include shippers, truckers and railroads, which according to Drewry “are probably to be at the back of the queue when it comes to accessing this vital information”.
As the consultant noted, while based on the latest network brochure of CMA CGM, the biggest carrier in the Ocean Alliance, port rotations were finalised for all 40 weekly services, THE Alliance finalised rotations only on three of its 30 weekly services based on Hapag-Lloyd’s brochures.
“In 19 cases there are at least two ports pending on a given loop and in the worst case on the Asia-Europe FE2 service there are a total of five ports pending,” Drewry noted.
“For shippers, the lack of clarity on which hub ports are going to be used is not too much of an issue, as its fairly invisible to them – but the gateway ports are a much more significant hole in their knowledge.”
As Drewry added, it was leaked that port operator DP World was awarded five of THE Alliance’s Asia-North Europe UK calls, of which three in Southampton and two in London Gateway.
A statement by the consultant also noted that according to what is available on the brochures both alliances have lowered their ambitions.
The Ocean Alliance is in fact set to start with 40 weekly services instead of the 41 originally announced as one of five planned Asia-Mediterranean loops (MED4) was cut.
THE Alliance is set to start with 30 services instead of the planned 31 as two of the 11 planned Asia-West Coast North America services were cut, with an agreement with the Israeli Zim meaning that there will be an additional Med-North America service.
Drewry argued that THE Alliance’s members could have been “distracted” by ongoing changes including the merging process of Hapag-Lloyd and UASC, and the three Japanese lines working to combine their container operations for next year.
The consultant commented: “How much motivation will any senior management that suspect they will not be with the new J Lines entity have? Lastly, Taiwanese carrier Yang Ming has been busy trying to repair its financial health and fighting off merger rumours.”
“The cynic in us also wonders if carriers from both groups decided against announcing any capacity details for fear of undermining their contract negotiations with Beneficial Cargo Owners (BCOs),” Drewry’s statement noted.
“Any signal of a future rise in capacity from April could well have dented their bargaining power in the latest round of annual East-West contracts, which by all accounts carriers fared much better in than last year.”
According to Drewry, the existing 2M alliance, which consists of Maersk and the Mediterranean Shipping Company (MSC), could use the delays of the new alliances to its advantage.