How will the Shipping Alliances fare in 2017?

shipping alliances

As the New Year of 2017 coming upon us, so, too, is for the battle for the US trade. As the three major shipping alliances – The Alliance (Hapag Lloyd, K-Line, MOL, NYK Line and Yang Ming), Ocean Alliance (CMA-CGM, Cosco Shipping, Evergreen Line, Orient Overseas Container Line) and the 2M (Maersk, Mediterranean Shipping Line) – these alliances will be in fierce competition with each other due to overcapacity and weak demand for the US import market.

Starting by April 2017, since the Federal Maritime Commission (FMC) approved The Alliance as the last group for a major vessel sharing agreement, the three major alliances will completely dominate the North Asia, South Asia, Southeast Asia-North America trade by almost 90-percent market share. As other non-alliance carrier members such as ZIM Integrated Shipping, Hamburg Sud, Pacific International Lines, Wan Hai Lines, and to some extent, Matson, will have a decision to make: do they will continue servicing the Asia-North America trade lanes. The Ocean Alliance will have 20 weekly services between Asia-North America; The Alliance will have 16 weekly services; the 2M, which has a slot agreement with Hyundai Merchant Marine since it failed to have a full membership, will have the same weekly services as the aforementioned.

Prior to last month, before the FMC allowed The Ocean Alliance to go in effect, it insisted that the members of the alliance to independently negotiate with the tug, barge and chassis providers for services. With that said, the 2M has a similar restrictions implemented with them as well. Now, The Alliance’s VSA (vessel sharing agreement) would allow them to negotiate with third party providers to use their joint buying power to lower rates.

All in all, these three major alliances will field competitive service and rates, as the share for 2017 will break down with the Ocean Alliance taking 40 percent of the market share, while The Alliance with 27 percent and 2M & Hyundai Merchant Marine taking 20 percent.

How can MTS help you?

We at MTS Logistics, Inc., are prepared to help our customers navigate the trade, shipping and logistics world in 2017.

Call us today at 212-594-3117 or e-mail us at [email protected] to discuss how we can help you navigate your shipping needs.