27 February 2024 (Lloyd's List) - THE Ocean Alliance’s decision, announced this morning, that it will extend its co-operation through to at least 2032 comes as little surprise among the current restructuring of the alliances.
The Ocean Alliance operates the largest number of loops on all the main east-west trades, other than the transatlantic, according to Drewry senior associate Tony Mason.
Projecting ahead to 2025, Drewry estimates the Ocean Alliance will operate 40 loops, while the new Gemini Cooperation between Maersk and Hapag-Lloyd will have just over half that at 21. The remaining members of The Alliance will offer 19 and Mediterranean Shipping Co just 15. Again, the Ocean Alliance will be the largest on all but the transatlantic.
Despite this, even without Hapag-Lloyd, The Alliance would remain in a relatively healthy position, Mason said.
“They are still number two on Asia-west coast North America and three in all the other trades, except the Middle East,” he said.
“The trade with the greatest challenge is the transatlantic, where Hapag-Lloyd is the major contributor and where The Alliance will probably have only one loop on offer.”
MSC, which is going it alone from next January after the dissolution of the 2M alliance with the combination of its own tonnage and that taken from the 2M, is not dissimilar to The Alliance.
But the picture changes when looking at the orderbook. MSC has by far the largest fleet and orderbook.
“If you look at total fleet, MSC is in the best position. If you look at the Gemini lines alone, then Maersk is in a good position. Hapag-Lloyd on this measure, however, is only half the size of Maersk.”
CMA CGM, Cosco and Evergreen from the Ocean Alliance rank on the higher side of fleet sizes, while the remaining members of The Alliance rank seventh, eight and ninth in terms of operated capacity.
But when measuring only the tonnage committed by lines to their alliances, a different picture emerges.
“This is the tonnage they are going be deploying in the future,” Mason said. “The vessels deployed in north-south or regional trades isn’t so relevant.”
Maersk and MSC deployed roughly equal capacity to the 2M alliance, for example.
“When you look at The Alliance, Hapag-Lloyd was not the largest; Ocean Network Express was,” Mason said. “Yang Ming and HMM do not look as small as they do when seen in the global fleet context either.”
When the future orderbook was taken into account, the future of the remaining The Alliance players became less certain, however.
“The Ocean Alliance has the largest orderbook relative to its existing fleet at around 35%,” Mason said.
“Maersk and Hapag-Lloyd, by comparison are at only 11% relative to their fleets. The remaining The Alliance lines and MSC are around the 24% average.”
Moreover, the Ocean Alliance has a spread of newbuilding orders across the 10,000 teu-24,000 teu size range. The Gemini Cooperation has fewer ships on order, but in the 16,000 teu-18,000 teu range, and the 18,000 teu and above segment.
“While the remaining The Alliance lines have reasonable orderbooks, they have nothing over 16,000 teu and the preponderance of their orderbook is 10,000 teu-14,000 teu,” Mason said.
“That maybe okay for the transpacific trade, but if they aspire to put more on the Asia-Europe trade they haven’t really got the right size ships.”
MSC, by comparison, has 29 vessels of over 16,000 teu due for delivery before the end of 2025.
“If MSC feels it has too few loops, it has enough ships to run three new loops on the east west trades from their 16,000 teu-plus ships, and they have enough smaller ships for more on the transpacific,” he said.
That lack of a larger orderbook left the remaining The Alliance lines in something of a quandary, but one in which MSC could potentially play a part.
“We don’t entirely know what MSC and the remaining The Alliance lines could do if they feel their position is not as good as it could be relative to the others,” Mason said.
“They might look to other partners but there are not many options out there. On the transpacific, Wan Hai and Zim are the largest non-alliance carriers. Zim may be a potential partner for MSC to continue to cooperate with post 2M and Wan Hai does have relationships with some The Alliance lines.”
But on the Asia-Europe trade there were no independent players that MSC or The Alliance could join up with, which left an intriguing possibility of some form or cooperation between MSC and one or all of The Alliance’s remaining lines.
“I don’t think we would expect a new alliance between MSC and The Alliance, but they could do some pragmatic co-operations, particularly on Asia-Europe,” Mason said.
“They may feel they need more than three loops each when the Ocean Alliance has seven loops. But whether they do it via slot swaps or operating a trade-by-trade VSA arrangement will be interesting to see, but on this trade MSC and The Alliance are at some disadvantage to both Gemini and the Ocean Alliance.”
