by Lloyd's List
9 September (Lloyd's List) - “THIS is about us showcasing the strength of the Mediterranean Shipping Co network,” explained chief executive Soren Toft, as he set out the future structure of global container shipping alliances on Monday.
Having unveiled its new standalone east-west service network, a slot exchange co-operation with the new Premier Alliance of smaller rivals and a vessel-sharing agreement with Zim on the transpacific trade, Toft said that immediate plans for the world’s largest container carrier was to continue its dominant growth strategy and lead from the front with a standalone network.
By February next year, when Maersk and Hapag-Lloyd’s Gemini alliance begins operations and the 2M alliance is formally dissolved, MSC’s fleet size and market share are expected to equal the combined total of these two competitors.
In setting out its plans for a standalone network and its contingency plans in the event of a reopening of the Red Sea, MSC has set the agenda for a market facing significant changes next year.
“This is about the significance of the scale of our fleet and the breadth of the coverage that we can now offer on a standalone basis. It’s about MSC now having operational freedom, the flexibility, the agility, the speed of decision making to respond to changes in demand,” Toft told Lloyd’s List.
Setting out what the shake-up in the alliances means in terms of network availability, Toft said that MSC’s plans were being announced now to give the market clear visibility in advance of Asia-Europe contract negotiations getting underway next month.
MSC has presented two options to the market — one Suez route with more than 1,900 direct port pairs or the Cape of Good Hope with more than 1,800 direct port pairs.
“We don’t know if that Suez routing will be available by the time that we’re going to start moving the client’s cargo, so we are doing this as a matter of prudency.
We wanted to be up front with our clients and say that we have now the scale of network that we can actually offer both options,” said Toft.
MSC’s newly announced network covers five trades with 34 loops, including seven loops for Asia-North Europe and six for Asia-Mediterranean, while Premier Alliance offers seven and five strings of services respectively, on these two shared trades.
MSC has stressed that its association with Premier is very much characterised as strategic slot swaps across some key trades to flesh out its now standalone network even further, rather than any vessel sharing agreements.
The question of how much capacity is MSC dedicating here, and what the split of standalone services to on Asia-Europe is going to be, is not currently clear.
“We have very good standalone network and we could have gone with just that, but we thought that this made a lot of sense to give even more breath and coverage to our network. So that’s why we have done it,” said Toft who insists that the priority is now to continue strengthening MSC’s standalone network.
“We believe it’s important that we now stay as a standalone player,” he said.
“We have the scale and the strength and the fleet that we can do that, so when we knew there was no option to extend the 2M Alliance we were very clear that we wanted to be on our own because that gives us the operational freedom, the flexibility, the agility, the speed of decision making that we believe our clients and the market is demanding from us”.
Commenting on future growth plans, Toft that the announcement of the post-2M plans was designed to give the market visibility, but allow clients to start planning, but that did not in any way alter the growth trajectory for MSC.
“We are continuing on the path of growth. You can see from the orderbook that we are continuing to grow and we have been very clear that we will continue to grow our services. This is not a change of direction, this is a continuation. With the scale of our network we can stand on our own two feet and we look forward to doing that,” said Toft.
