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Introducing THE Alliance Container Shipping Partnership

May 17, 2016 12:05 am Published by

To counter the dominance of the existing 2M partnership (which controls approximately 34 percent of the Asia-Europe trade route) and the Ocean Alliance, some of the remaining "free agent" container lines – namely NYK Line, K-Line, MOL, Hapag-Lloyd, Hanjin Shipping, and Yang Ming – have agreed to form a new global shipping alliance – THE Alliance.

It has also been reported that the United Arab Shipping Company and Hyundai Merchant Marine are likely to join THE Alliance partnership in the near future, as well.

hyundai merchant marine the alliance quote

The six-member alliance is not final and definitive. The door is still open to us. We expect to have no problem joining the group once our debt-restructuring program with creditors ends successfully.- Hyundai Merchant Marine Spokesperson [source: Wall Street Journal]

The 2M alliance is a 10 year partnership agreement between two leading container lines: Maersk Line and the Mediterranean Shipping Company; which are currently ranked first and second in the world in terms of capacity. The 2M alliance has been in operation since January 2015, and boasts a fleet of 185 ships with a combined capacity of 2.1 million TEU.

Although still subject to regulatory approval, the Ocean Alliance will include COSCO Container Lines, CMA CGM, Evergreen Line, and Orient Overseas Container Line (OOCL). This five year partnership is scheduled to commence in April 2017 and will operate with a fleet of 350 container ships. With its estimated capacity of 3.5 million TEU, this container shipping alliance would control approximately 26 percent of the Asia-Europe traffic.

The industry's three other existing shipping partnerships, Ocean Three, G6, and CKYHE, are all set to expire in 2017. Hapag-Lloyd, MOL and NYK are currently members of the G6 partnership, while K-Line, Yang Ming, and Hanjin Shipping are part of the CKYHE Alliance. Many of these previously established partnerships will form the basis of the new THE Alliance.

Partners in these container shipping partnership agreements share cargo ships, trade networks, and port calls, which can reduce their operating costs by hundreds of millions of dollars annually. Container shipping lines have recognized the value in forming partnerships, and see vessel sharing as a way to reduce costs and improve vessel utilization amid the market's volatility.

alphaliner shipping alliances quote

Nowadays, you have to be in an alliance because you need these really big vessels to be competitive per unit cost.- Analyst, Alphaliner [source: The Marine Executive]

It is estimated that THE Alliance, if approved by regulators, will control approximately 22 percent of Asia-Europe container traffic​.

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