Over the past couple of years ocean container lines have formed into four mega-alliances, largely to create economies of scale. By sharing space on mega-vessels, carriers benefit from lowered operating costs due to the sheer volume. Currently, the G6 and CKYHE alliances hold the majority of the capacity on the Trans-Pacific Eastbound trade lane. However, with the pending CMA CGM purchase of NOL, a portion of the G6's share could be shifted to the Ocean Three.
First it is important to know the makeup of the ocean carrier alliances.
- 2M - Maersk Line and Mediterranean Shipping Company (MSC)
- CKYHE - Cosco Shipping, K-Line, Yang Ming Marine Transport, Hanjin Shipping and Evergreen Shipping Agency
- G6 - American President Lines (APL), Hapag Lloyd, Orient Overseas Container Line (OOCL), Nippon Yusen (NYK), Mitsui O.S.K. Lines (MOL) and Hyundai Merchant Marine Co.
- Ocean Three - CMA CGM, China Shipping (CSCL), United Arab Shipping Company (UASC), Hamburg Sud (through vessel share)
|Mediterranean Shipping Company||Switzerland||2,702,949|
|Yang Ming Marine Transport||Taiwan||542,255|
|Hyundai Merchant Marine Co.||South Korea||381,566|
The Maritime Executive via Drewry Maritime Research has provided excellent visuals to show the capacity share for the four mega-alliances in the Trans-Pacific Eastbound Trade lane. As shown below, the G6 and CKYHE alliances make up 66% of the capacity offered between Asia and North America ports.
The current capacity percentages stand to be altered if CMA CGM purchases Neptune Orient Lines (NOL) as planned. NOL's core container shipping business is American President Lines (APL) which is currently in the G6 Alliance. The transfer in APL from the G6 alliance to the Ocean Three could impact the overall makeup of the ocean cargo market.
The purchase of NOL must still be approved by regulators. According to the JOC, a condition of the offer is that anti-trust approval for the merger must first be received from regulators in the U.S., EU and China. That is expected by mid-2016 with the closing of the deal expected around August next year.
Alliance agreements and the subsequent space is an ever present topic within the shipping industry. The agreements will expire at different times over the next few years creating a dynamic environment for any future mergers and acquisitions.
Marisol International specializes in ocean freight transportation along with air, truck and rail transportation solutions. Additionally, Marisol offers clients origin and destination customs clearance, customs bonds, cargo insurance, duty drawback as well as reconciliation services. Contact us today to start importing or exporting. Or subscribe to our weekly industry newsletter to stay updated on changes within the international shipping industry.