27 March 2024 (Lloyd's List) - OCEAN Network Express last week laid out plans to increase its fleet capacity to 3m teu by 2030.

While the goal is ambitious enough and will require the carrier to increase its capacity by more than 700,000 teu on top of its existing orderbook in just over five years, it will also put it on a collision course with sometime partner Hapag-Lloyd, which is determined to keep its own place in the pantheon of container lines.

Under their current fleet deployments, Hapag-Lloyd ranks fifth in the world in terms of capacity deployed with just over 2m teu. ONE comes in not far behind with 1.8m teu.

But ONE has a larger orderbook of nearly twice the size of Hapag-Lloyd's. When current orders are delivered, the rankings will swap, putting ONE above its German rival.

This alone will not put ONE into fifth place, however, as Evergreen's orderbook is bigger than both put together, and when delivered will push the Taiwan-based line into fifth place behind Cosco, followed by ONE then Hapag-Lloyd.

Speaking in a recent online presentation, Hapag-Lloyd chief executive Rolf Habben Jansen began to outline the bones of its Strategy 2030 business plan, in which the carrier intends to keep its position as a top five carrier.

"Our strategy towards 2030 is that we will continue to be a liner shipping business that is also willing to invest in terminals and inland operations," Habben Jansen said.

"In terms of the ambition we have until 2030, it is to remain a top five global container line, similar to what we have been over the past few years. We will do everything to become the undisputed number one for quality, not only on the service side but on the operational quality side. We also need to make sure we perform as only that will allow us to invest into the future."

He acknowledged the orderbook showed Hapag-Lloyd falling from its position, however.

"If you look at the statistic that is correct, but we have a number of long-term charters that are going to come to us that you don't see in the orderbook," he said.

"I expect that if you look at that ranking in two or three years from today there is more than a 50% likelihood that Hapag-Lloyd will still be number five."

But ONE's stated aim of getting to 3m teu will push Hapag-Lloyd to do the same if it wishes to retain its position.

ONE needs to increase its orderbook if it is to stay in the running, particularly with Evergreen biting at its heels.

"The move by ONE represents a belated attempt to regain market share, after successive years of sub-par growth," said analysts at Linerlytica.

"Since the formation of ONE was first announced in 2016, the consolidated Japanese carrier has grown its fleet by just 30% in the past seven years compared to market growth of 40% over the same period."

Alphaliner said the plan marked an "ambitious expansion drive" for the company.

"ONE has an orderbook of 41 vessels of 520,000 teu, but even assuming this sum is fleet growth not replacement, this leaves considerable headroom yet to reach 3m teu."

ONE's strategy comes as Hapag-Lloyd, its largest ally in The Alliance, leaves the grouping to join Maersk in the Gemini Cooperation next year.

This has triggered concerns over whether ONE and its remaining partners can maintain the scale and efficiency of their collaboration.

ONE chief executive Jeremy Nixon remains buoyant, however.

"In 2025, we will have a new network, which we will disclose next month," he told the recent TPM conference in Long Beach. "Our aim is to have as good, if not better, network solutions in 2025 than we have in 2024."

ONE said it was "shifting gears" towards sustainable growth in order to become one of the world's leading container shipping companies. Securing economy of scale is one of the pillars to achieve this goal.

Challenged on how Hapag-Lloyd would keep its position in the face of growing rivals, Habben Jansen said there were several options available.

"In essence there are three ways we can remain at number five," he said.

"One is to buy some new ships. We will certainly buy some new ships before 2030. The other is to take existing ships on charters, which is something we do quite actively.

"The third one is, of course, mergers and acquisitions."

Hapag-Lloyd is not averse to M&A. Its current position came about from its mergers with CSAV in 2014 and then with UASC in 2017. It has since absorbed smaller operators such as NileDutch in 2021 and Deutsche Afrika-Linien in 2022. It also put in an unsuccessful bid for HMM.

One slightly outlandish, but in some ways possible, solution would be a merger between Hapag-Lloyd and ONE, a notion raised a year ago by Vespucci Maritime chief executive Lars Jensen.

At the time, he suggested that a combined Hapag-Lloyd and ONE would give each line the scale it needed to compete with the larger segment above them, those carriers with fleets over 3m teu.

"I see two companies that are not that divergent in the way they see the world and run their strategies," he said.

"They have a choice of continuing to be tangled in an alliance that gives some synergies you can't quite exploit, and they are going to be up against carriers twice their size. From my perspective, it is just a matter of time."

Since then, those unexploitable synergies have proved too much for Hapag-Lloyd, and the company's sudden and unexpected departure for The Alliance is understood to have soured relations between Habben Jansen and Nixon, who had been considered close business allies. The pair co-chair the World Shipping Council, for example.

That relationship may have cooled recently, but the logic remains. A combined Hapag-Lloyd/ONE would be a top table player even with their current fleets, putting them in third place behind Maersk.

It would also solve another issue: ONE's manoeuvring towards big player status requires another swathe of orders in a market that is already saturated with tonnage.

"These attempts by straggling carriers to play catch-up would further worsen the supply-demand imbalance over the coming years, with the next moves by other laggards including Maersk and Hapag-Lloyd to be watched closely," Linerlytica said.

There are other challenges to a Hapag-Lloyd/ONE merger, not least the regrouping of the alliances. But Jensen, who first proposed it, remains convinced.

"I said Hapag-Lloyd would merge with ONE; that hasn't happened. But I said it was on a three- to five-year timescale. Let's see where we are in three or four years from now."