Friday, May 13, 2016

THE REMAINING CONTAINER LINES FORM THE ALLIANCE

NEWS FLASH: 'THE Alliance' to commence operations in 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.

   Six of the eight “orphan” ocean carriers not included in the proposed OCEAN Alliance or the existing 2M Alliance have established a new vessel sharing agreement (VSA) referred to as "THE Alliance," which plans to commence operations in April 2017 for a term of five years.
   The carriers include Hapag-Lloyd of Germany; Japan's Mitsui O.S.K. Line (MOL), Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha ("K" Line); Taiwan-based Yang Ming; and South Korean line Hanjin Shipping. Hapag-Lloyd, MOL and NYK are currently members of the G6 Alliance, while “K” Line, Yang Ming and Hanjin are part of the CKYHE Alliance.
   Although an agreement has been concluded by the six carriers, it must still be approved by the relevant regulatory authorities in the United States, Europe and China.
   In addition, the announcement noted the grouping could potentially include Ocean3 Alliance member United Arab Shipping Co. (UASC), which is currently discussing cooperation or a merger with Hapag-Lloyd.
   “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.
   “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.
   They said the combination would "feature enhanced port coverage in Asia, North America, Europe including the Mediterranean as well as Middle East. The network of THE Alliance will ensure frequent sailings, high reliability and very attractive transit times for all shippers in the East-West trade lanes.”