17 January 2024 (Lloyd's List) - NEWS that Maersk is to join forces with Hapag-Lloyd in what the two carriers are calling the Gemini Co-operation has rattled the foundations of the sector's alliance structure.

The first signs that the decade-long status quo was coming to an end occurred when Maersk and Mediterranean Shipping Co announced last year that the 2M alliance would be dissolved from January 2025.

That put the world's two largest carriers by capacity out on their own. Maersk felt its integrator strategy could best be served alone, while MSC had sufficient capacity to no longer need a partnership agreement. 

"I can see why Maersk wants a new partner," said Alphaliner shipping analyst Jan Tiedeman.

"They are on the fence on whether they see themselves as big enough to be a standalone carrier, like MSC will be, or not.

"Apparently, and contrary to their earlier announcement to become a standalone operator, they came to the conclusion that they still need a partner in order to maintain a comprehensive route network on the east-west mainline."

He added that for Hapag-Lloyd, Maersk provided a "good, strong partner".

"Hapag-Lloyd will be trading its position of being the dominant partner in The Alliance to that of being the junior partner in Gemini," he said.

"Everything has its pros and cons. In my view, The Alliance was a good fit for Hapag-Lloyd and the two strong partners - Hapag-Lloyd and Ocean Network Express - mostly got along well."

The move will also see Hapag-Lloyd leave The Alliance, its vessel sharing agreement with ONE, HMM and Yang Ming. Hagag-Lloyd will quit in January 2025, the same point at which the 2M agreement ends.

Hapag-Lloyd's departure will leave ONE, Yang Ming and HMM in "a very vulnerable position" as they would struggle to find a network matching that of MSC, Gemini or the Ocean Alliance, said Vespucci Maritime chief executive Lars Jensen.

Any realignment will, however, put pressure on ONE, which will become the key player in a much-depleted The Alliance.

"This leaves a large gap in The Alliance's offering, which will by far be the smallest group remaining," said Drewry container research manager Simon Heaney.

"This will undoubtedly come as a surprise to them as the agreement was extended for 10 years when HMM joined in April 2020."

In response to questions from Lloyd's List, ONE said: "The Alliance's product for 2024 has already been announced [and] we will provide The Alliance-related services in 2024 as announced.

"We have been aware of the possibilities/scenarios of reorganisation of alliances. We will make an announcement at the appropriate time regarding specific service structures in 2025 onwards."

But ONE will now be left without a meaningful partner. Both HMM and Yang Ming have fleets with less than half the capacity of ONE's 1.8m teu.

"In my view [The Alliance] don't have enough 'oomph' without Hapag-Lloyd,” Tiedeman said. “Will they seek to replace Hapag-Lloyd with a new partner? But who? Only CMA CGM comes to mind, but that would mean the end of the Ocean Alliance."

One possible scenario was a reshaping of both the The Alliance and the Ocean Alliance of CMA CGM, Cosco and Evergreen.

"The pressure is on [The Alliance] carriers to either lure a new partner out from Ocean Alliance, or reinvent a new service concept," Jensen said.

"With the playing field having opened in this way each of these carriers will be asking themselves whether the current setup is ideal for themselves or whether a new constellation might be better."

Speaking last year, Jensen warned that the Ocean Alliance was also on shaky ground, with CMA CGM moving more towards an integrator strategy, while Evergreen focused on tonnage. China's state-owned Cosco also makes an uncomfortable bedfellow for Taiwan-based Evergreen in the current geopolitical environment.

"Alliances tend to have a lifespan of roughly five to eight years, and hence the realignment we are seeing now will most likely be the competitive playing field on the east-west services into the early 2030s."

Could a future arrangement see CMA CGM, Cosco and ONE partnering to form a supergroup larger than any of the others? That would leave Evergreen to lead the remainders pack of HMM and Yang Ming.

Both of those arrangements are equally unlikely. But so too was the surprise tie-up between Maersk and Hapag-Lloyd. Not since the four weddings and a funeral of the previous decade have container shipping family fortunes been so up in the air.