Proposed Mega-Containerships Alliance 2M: Analysis

By George Backwell
Tuesday, July 15, 2014
Carrier Shares of Effective Vessel Capacity from Asia to North Europe, June 14: Image DMR

Maersk and MSC have just announced a mega vessel sharing agreement that will replace their failed P3 alliance early next year. It will be smaller, and compare well in size with the G6 and CKYH alliances – but what about CMA CGM? Drewry Maritime Research consider the question in their latest 'Container Insight Weekly' excerpted here as follows:

Maersk and MSC have taken on board China’s objections to the P3 alliance by coming up with a new vessel sharing arrangement called 2M that they hope will be agreed by all regulatory authorities before the beginning of next year. Out has gone CMA CGM, in order to bring the agreement’s market share down to more acceptable levels, and in has come a much simpler joint co-ordination committee to monitor the carriers’ network on a daily basis.

The objective remains the same – namely to reduce costs by sweating assets more efficiently between Asia/Europe, Asia/US and Europe/US, but as port rotations and vessel sizes have not yet been clarified, it is not possible to say how their market shares will change, or their undeniable savings compare with that envisaged by P3.

Drewry’s analysis shows that on the Asia-North Europe trade route, Maersk and MSC currently have a 32% share of all effective westbound vessel capacity, which is more than the 30% market share threshold normally allowed under the European Union’s consortium regulation, so will require close scrutiny [see Figure 1 shown here, and noted: Effective vessel capacity = total vessel capacity less estimated space allocated to wayport and out of scope cargo
; P3 = Maersk, MSC and CMA CGM; CSAV assumed to be independent of Hapag-Lloyd].

Maersk currently provides 21.3% on its own, and MSC/CMA CGM provide another 21.2% through joint services shared fairly evenly, which would have given the P3 alliance a much bigger share of 42.5%. Only six weekly services are planned by 2M instead of nine, but the VSA will still be the trade lane’s largest.

On the Asia/USWC route, 2M is planning four weekly services, whereas P3 was expecting to run six. At present, Maersk, MSC and CMA CGM share four weekly schedules. Between Asia and the USEC, two services will be provided, the same as at present, but two less than planned by P3.

On the US-North Europe route, 2M will operate three weekly services – the same number planned by P3, which reflects the fact that CMA CGM’s capacity share on the route is relatively small.  2M will probably be the second-largest alliance in the trade lane, after G6, in Drewry’s estimation.

As 2M will not include joint marine operations, with each party looking after its own duties, including stowage, voyage planning and port operations, service quality could be very different to that envisaged by P3. Will a shipper loading a container on an MSC ship really get the same schedule reliability as when loading on a Maersk ship, for example, as Drewry has consistently recorded a lower level of reliability for MSC?

Maersk will want to continue its Daily Maersk service guarantees between Asia and Northern Europe, which could create further friction between the two new partners.
It is not yet known whether 2M will negotiate joint operational contracts. If this does happen, it will be a concern to terminal and intermodal service operators, but an opportunity for the larger operators to secure more market share.

A bigger concern will be the future of CMA CGM, as it has been sharing vessels with MSC between Asia and Northern Europe, and with Maersk between Asia and the Mediterranean, since 2011, so will not be able to fill its ULCVs on its own reasonably. The game of musical chairs of the mega-alliances means that CMA CGM will now have to seriously consider a closer East-West vessel-sharing arrangement with someone else, therefore, the most obvious candidates being UASC and CSCL. Both have recently ordered 18,000 teu mega-ships, and have worked with CMA CGM in the past – but there are other options.

They may be needed, as CMA CGM has 28 ships of 9,000 teu on order, some of which are more suitable for North-South trades.

Drewry's view
2M will become the largest alliance on the Asia-Europe route, if approved. Like other alliances, it will help reduce costs, and should be allowed.

Source: Drewry Maritime Research

 

Maritime Reporter November 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

WSC CEO Koch to Retire in 2015

Chris Koch, current president and CEO of the World Shipping Council (WSC), will retire from his position on July 31, 2015, and WSC Senior Vice-President and General Counsel,

Cecon Secures Finances to Complete Newbuild

Cecon ASA has petitioned for a debt restructuring agreement (in Norwegian: gjeldsforhandling). Certain funds managed by York Capital Management Global Advisors,

HII Board of Directors Elects Two VPs

Huntington Ingalls Industries’ (HII) board of directors has elected Kellye Walker to serve as corporate vice president and general counsel and Charles R. “Chuck” Monroe Jr.

Contracts

Port of Galveston to Repair Public Pier

Galveston Wharves’ board of trustees today unanimously approved a project to repair pilings and pier deck in the Pier 19 area of the port. The board awarded the contract,

NASSCO Cuts Steel on APT "ECO Tanker"

General Dynamics NASSCO started construction of another ship in its commercial shipbuilding backlog, starting construction of a second “ECO” tanker to be built

Multraship Buys Three More Tugboats from Damen

Multraship and Damen Shipyards Group agreed on three new ASD (Azimuth Stern Drive) Tugs, all for delivery to Multraship in 2015. After delivery in Vietnam, scheduled

Finance

Cecon Secures Finances to Complete Newbuild

Cecon ASA has petitioned for a debt restructuring agreement (in Norwegian: gjeldsforhandling). Certain funds managed by York Capital Management Global Advisors,

Libyan State Oil Firm NOC Will Remain Independent

Libya's Tripoli-based state firm National Oil Corp (NOC) will remain independent, it said on Thursday, in an apparent attempt to reassure foreign oil buyers it will stay out of the country's conflict.

Oil Prices Retreat from Short-covering Rebound

Global crude prices fell more than $1 a barrel on Thursday, retreating from a short-covering charged rally as traders bet the market had not shaken off a six-month long rout on oversupply concerns.

Container Ships

US Shippers, West Coast Dockworkers Union Resume Contract Talks

Negotiators for shipping lines and terminal operators at 29 U.S. West Coast ports resumed contract talks with the union for dockworkers on Thursday, as cargo backups continued at the ports,

K Line to Expand Use of Eco-efficiency Software

Three further K Line vessels to install ClassNK-NAPA GREEN eco-efficiency software after reporting fuel savings during trials on an 8,600 TEU container vessel   NAPA

Even 'Small' Vessels are Getting Bigger

The Shipowners’ Club is a mutual provider of P&I insurance that has throughout its 160 year history been dedicated to serving owners of small and specialist ships.

Logistics

WSC CEO Koch to Retire in 2015

Chris Koch, current president and CEO of the World Shipping Council (WSC), will retire from his position on July 31, 2015, and WSC Senior Vice-President and General Counsel,

US Shippers, West Coast Dockworkers Union Resume Contract Talks

Negotiators for shipping lines and terminal operators at 29 U.S. West Coast ports resumed contract talks with the union for dockworkers on Thursday, as cargo backups continued at the ports,

Great Lakes Coal Trade Slows in November

Coal shipments on the Great Lakes totaled 2.6 million tons in November, a decrease of 3 percent from a year ago, as shipments were affected by weather-related delays,

Consulting

USCG Provides SAR Planning Support to Korea

Coast Guard search and rescue crews were relieved by Republic of Korea assets on Saturday in their search for 26 crewmembers from the fishing vessel 501 Oryong that capsized Nov.

Vistronix Acquires Agency Consulting Group

Vistronix has acquired the Agency Consulting Group (ACG). The McLean Group's Aerospace, Defense & Government Services (ADG) practice served as the exclusive mergers

DONG Energy Appoints CEO for E&P

Søren Gath Hansen will step down as Group Executive Vice President and CEO for E&P. His successor is David B. Cook who comes from a position as Executive Officer

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Navigation Pipelines Port Authority Ship Electronics Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1785 sec (6 req/sec)