Six ocean carriers to launch 'THE Alliance' in April 2017

The proposed ocean carrier alliance will include Hapag-Lloyd of Germany; Japan's MOL, NYK and "K" Line; Taiwan-based Yang Ming; and South Korean line Hanjin, and could potentially add Dubai-based UASC and Korea's HMM down the road.

Ongoing discussions between Hapag-Lloyd and UASC are progressing according to plan, although an agreement on business combination has not yet been reached and will in any event be subject to regulatory approvals," according to a joint statement issued by THE Alliance. "It is anticipated that UASC will become part of THE Alliance." In a separate statement, struggling South Korean line and current G6 Alliance member Hyundai Merchant Marine (HMM) said it could become part of the new VSA as well. HMM said it “understands that today’s announcement of the establishment of THE Alliance is tentative by its nature, and its member companies are yet to be finalized. HMM’s entrance into THE Alliance is only being postponed as there have been several media reports since the beginning of this year about the possibility that HMM might be under court receivership. The current members of THE Alliance is going to determine HMM’s participation once HMM’s business is normalized.” The six carriers said THE Alliance will include “all East-West trade lanes namely, Asia-Europe/ Mediterranean, Asia-North America West Coast, Asia-North America East Coast, transatlantic and Asia-Middle East/Persian Gulf/Red Sea.” The changes announced today were set in motion last month when several carriers announced that next April, they would leave their current alliances to form a new grouping called the OCEAN Alliance in the wake of the merger of China Shipping (CSCL) and COSCO into China COSCO Shipping and CMA CGM’s acquisition of APL parent Neptune Orient Lines. The new OCEAN Alliance members include CMA CGM and China Shipping from the OCEAN 3 alliance; COSCO and Evergreen, which are part of the CKYHE Alliance; and OOCL and APL from the G6 Alliance. Until next April, carriers will continue to operate in their current groupings. THE Alliance will combine approximately 3.5 million TEUs of capacity or 18 percent share of the global container fleet capacity, according to the lines. All six partners operate advanced and competitive fleets with more than 620 ships in total. The addition of UASC would boost the alliance's capacity to 4 million TEUs. According to ocean carrier schedule and capacity database BlueWater Reporting, the six carriers in THE Alliance would immediately control a combined 35 percent of the market in the eastbound transpacific trade between Asia and North America and 26 percent of the westbound Asia to North Europe trade. The charts below, built using data from BlueWater Reporting's Carrier Trade Route Deployment application compare the market share of the newly proposed carrier alliances by weekly deployed capacity in the transpacific and Asia-Europe trade lanes.

The recently announced OCEAN Alliance has a projected market share of 38 percent in the transpacific and 32 percent from Asia to North Europe, while the 2M Alliance of Maersk Line and Mediterranean Shipping Co. (MSC), the largest and second-largest carriers in the world by capacity, respectively, hold a 14 percent market share in the transpacific and a 33 percent share in the Asia-Europe trade lane. Non-alliance lines, which currently include HMM and UASC, among others, as well as capacity on vessels that are currently listed as “unallocated” or “to be determined,” control 13 percent of the transpacific market by weekly deployed capacity and 9 percent of the Asia-Europe trade. “This agreement is a milestone and will enable the six partners of THE Alliance to offer sailing frequencies and direct coverage in the market,” member carriers said in a statement.