New Mega Alliances
April 1st has marked the début of two new alliances: the Ocean Alliance (Orient Overseas Container Line, Cosco Shipping Line, Evergreen Line, CMA-CGM with its APL brand) and THE Alliance (NYK Line, MOL, ‘K’ Line, Yang Ming Line, and Hapag-Lloyd-United Arab Shipping Co).
In our previous Container Market Briefing, we examined the port rotations characterising the services scheduled from April 2017, while in this edition we analyse the capacity deployed by the new alliances on the main East/West trade lanes.
Based on the latest edition of our Containership Databank, we estimate that the Ocean Alliance will be the dominant player on the East/West routes with about 34% of the total capacity deployed on these trade lanes (see Figure 1). Also above the 30% market share is the 2M Alliance, which has increased its share since May 2016 (see Figure 2) due to the number of alliances decreasing from four to three. Drilling down to the three major trade lanes on the East/West routes, we estimate that the 2M Alliance has increased its capacity on all of them, with the major increase reported on the Asia-Europe trade lane (up from 33% in May 2016 to 40% in April 2017). We estimate a market share of some 26% for THE Alliance.
The results of our analyses are shown in Figure 1 and Figure 2.
Figure 1: Deployed capacity in April 2017, market share by alliance on the East/West routes - current agreements Source: MDS Transmodal Containership Databank, April 2017
Figure 2: Deployed capacity in May 2016, market share by alliance on the East/West routes - old agreements Source: MDS Transmodal Containership Databank, May 2016
The container shipping industry is, however, far from being a simple split between three major alliances plus a group of smaller container shipping lines. All the shipping operators, with different degrees of freedom, are allowed to slot their spare vessel capacity. A few examples of slotting are listed below:
- CMA-CGM slots on THE Alliance AL5 & PS1 services
- PIL slots on Ocean Alliance Bohai, HRX and PRX services
- ZIM slots on MED-USEC trade lanes: two Hapag-Lloyd services (MPS, MGX) & THE Alliance – AL6
- ZIM slots on Hyundai –PS2
- Evergreen slots on the CP1 transpacific service operated by COSCO/PIL/Wan Hai.
- Evergreen slots on THE Alliance – PS1 service
- Hapag-Lloyd, NYK and Yang Ming slot on ZIM – ZCA service
- Wan Hai slots on Ocean Alliance – PRX
- Hapag-Lloyd and UASC slot on OCEAN Alliance - AMERIGO/ATM1/MENA
Although global demand is showing signs of recovery, the container shipping industry is still characterised by overcapacity. Consolidation and mergers and acquisitions are undoubtedly alleviating the gap between demand and supply, but further agreements amongst the shipping lines are needed to ensure stability in the market.