23 April 2016

[230416.EN.SEA] New Ocean Alliance Deal Made With CMA CGM, Cosco, Evergreen and OOCL

CMA CGM, Cosco, Evergreen and Orient Overseas Container Line have signed an agreement to form the Ocean Alliance enabling them to blunt the power of the mega alliance of Maersk and the Mediterranean Shipping Company (MSC). the world's first and second biggest shipping companies.

The stated aim of the new Ocean Alliance is to provide comprehensive service networks covering the Asia-Europe, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, Trans-Pacific, Asia-North America East Coast, and Trans-Atlantic trades, said the joint communique.

"This is a milestone agreement among four of the world's leading container shipping lines. Each line will offer best-in-class services to customers with fast transit times, competitive sailing frequencies, and the most extensive port coverage in the market," said the statement.

"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," said the statement.

The Alliance will also bring service reliability and the most efficient integration of the latest vessels in a fleet of over 350 containerships.
Initially the deployment will cover more than 40 services globally mostly connected with Asia, including about 20 services each in the US and Europe related trades.

Subject to regulatory approvals of competent authorities, the new alliance plans to begin operations in April 2017. The initial period of the Alliance shall be five years.

This development comes in the wake of newly-merged China Shipping Cosco Group as other carriers in Asia and Europe prepare to lineup of five operators to share capacity

The world’s biggest operators have been meeting with the US Federal Maritime Commission, the American regulator, the European Commission and China’s Ministry of Transportation on an agreement expected to set a new landscape in container shipping following consolidation moves since the end of last year.

Chinese regulators have already approved the Cosco-China Shipping merger which resulted in a new Shanghai-based entity called China Shipping Cosco Group, reported the Wall Street Journal.

"An announcement is expected from Shanghai, likely tomorrow where China Shipping Cosco Group will announce its proposed partners," one of those people said. "Talks with the regulators are continuing and substantial changes in the composition of existing alliances may happen."

Two other people involved in the matter said the new grouping may comprise China Shipping, Cosco Group, France’s CMA CGM, Hong Kong-based Orient and Singapore’s Neptune Orient Lines

Such an alliance would control around 26 per cent of the trade between Asia and Europe, the world’s busiest container shipping lane.

Regulatory reviews can take three months or longer. In the past, alliances got the green light from regulators if their combined market share was below 35 per cent

"I expect three main alliances instead of four going forward, and anyone not making it into those groupings won’t be able to survive in five years time," said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting.

"No matter how this pans out in the coming days, I expect more consolidation to come, which will again change the alliances landscape."

Source : HKSG.

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