In the shipping sector, low pricing and wide service coverage are two things that carriers must provide to customers in order to make their business profitable. To enable this, shipping alliances are forged.
A shipping alliance or an ocean alliance is a group of carriers or shipping companies which come together through a cooperative agreement, covering several trade routes among its members.
They also commit to vessel-sharing agreements to help cover as much of the shipping market as possible and also gain access to ships owned by other carriers in the alliance. This cooperation also allows alliance members to increase their customer base and offer lower prices.
Let us look at the 5 Major Shipping Alliances in this article.
1. Ocean Alliance
Launched in 2017, for a period of 5 years between COSCO Shipping, OOCL, CMA CGM, and Evergreen, the companies agreed to extend the alliance to 10 years, till 2027. In 2024, the alliance announced a further 5-year extension starting from 2027.
Data shows that this alliance will deploy around 390 container ships with an estimated nominal capacity of around 5 Million TEU. It will offer 38 services, including 19 transpacific services, 11 between Asia, Europe and the Mediterranean and 4 services between Asia and the Middle East.
It will have one of the biggest market shares and widest market coverage in 2025, per analysis from Linerlytica, a container shipping consultancy based in Asia.
THE Alliance will become the Premier Alliance from next month and by January end, MSC will also leave Maersk in the 2 M Alliance while Hapag-Lloyd will exit THE Alliance to join the Gemini Cooperation.
Per the data of Linerlytica, Ocean Alliance will have a dominant position on the Transpacific with 15 sailings to the west coast and 8 sailings to the east coast. It will provide the widest coverage to North Europe with a 7th service to be added, matching the coverage of MSC.
Gemini Cooperation will be the smallest alliance with the fewest number of weekly sailings on offer in 2025.
2. Gemini Cooperation
Maersk and Hapag-Lloyd signed an agreement to forge a shipping alliance called the Gemini Cooperation, beginning in February 2025, to form a fast, interconnected ocean network with reliability being the cornerstone.
The shipping alliance will span 7 trades and offer 57 services including mainliners and shuttle services, along with feeder services. The fleet will consist of 340 vessels, many ready to adopt cleaner fuels with a total standing capacity of around 3.7 million.
Since the situation in the Red Sea remains tense, the ships will sail around the Cape of Good Hope.
This partnership will cover routes including, Asia and North Europe, Asia and the Mediterranean, Asia and the Middle East, The Middle East to India and Europe, Asia and the US East Coast, Asia and the US West Coast and The Transatlantic.
The goal is for vessels to arrive at ports on time for at least 90% of departures. Apart from this, the shipping lines believe that this alliance will make it easy for them to decrease carbon dioxide emissions from their ships.
3. Premier Alliance
Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation announced their plan to collaborate in liner trades under the new Premier Alliance, which will be in place for five years, beginning in February 2025.
These three companies are a part of THE Alliance along with Hapag-Lloyd who announced it would also join Maersk in the new Gemini Corporation beginning in January 2025.
The Premier Alliance will provide more direct coverage and frequent sailings on major East-West trade lanes, offer end-to-end direct port container services, and use cleaner and greener practices to reduce environmental impact.
This alliance will focus on major East-West trade lanes including, Asia-Europe, Asia-North America, and Asia-Mediterranean routes. There are plans for 6 Asia-North Europe services, including five which will be in cooperation with MSC.
4. THE Alliance
This shipping alliance started operations in 2017 and included Hapag-Lloyd, HMM, Ocean Network Express and Yang Ming. It operated 260 ships, called at 82 ports and offered 31 different services.
It covered all the east-west shipping trades; Asia and North Europe, Asia and the Mediterranean, Transpacific-West Coast, Transpacific-East Coast, Asia and Middle East/Red Sea and the Transatlantic.
This network made it easy for the customers of each line to plan the transportation service of goods and services, offering an attractive package of products in major trade lanes.
In September 2024, ONE, HMM and Yang Ming Marine Transportation announced their plans to collaborate in liner trades under the new Premier Alliance, beginning in February 2025.
With Gemini Cooperation between Hapag Lloyd and Maersk in 2025, the former will not be a part of THE Alliance.
5. 2 M Alliance
Forged in 2015, between MSC and Maersk, this shipping alliance covered Asia-Europe, Trans-Atlantic and Trans-Pacific trade routes. The HMM also became a part of it in 2017 for three years but later teamed with THE Alliance.
In 2023, Maersk and MSC announced that they would discontinue this alliance by 2025, which might lead to a restructuring of present contracts, especially on the east-west trade routes.
This discontinuation might lead to increased competition between the two shipping giants.
However, clients can expect positive outcomes from this decision as both companies aim to provide better services to retain and attract more customers. Experts suggest that they may need to increase their ocean fleet to meet the demands of customers and ensure smooth cargo transportation.
MSC has also announced the introduction of a new standalone East-West Network, starting in February 2025, following the end of the 2 M Alliance. This new network will cover five trades with 34 service loops, including routes between Asia and North Europe, Asia and North America’s West and East Coasts, Asia and the Mediterranean, and the Transatlantic network. MSC will also offer routing options via the Cape of Good Hope and the Suez Canal, providing weekly services with more than 1900 direct port pairs through the Suez Canal Route and over 1800 direct port pairs via the Cape of Good Hope route.
ZIM Integrated Shipping Services has entered into an operational cooperation with MSC on the Asia-U.S East Coast, Asia-U.S Gulf trades, West Coast of Mexico, and Caribbean ports. The new services will be launched in February 2025, under a three-year agreement that includes slot swap and vessel-sharing agreements.
Shipping alliances have a significant impact on global shipping, as alliance members can reduce operational costs, offer more frequent sailings, better port coverage, and faster transit times. Collaborative operations also help in stabilizing freight rates, reducing carbon emissions, and promoting sustainability in the shipping industry.
These alliances benefit shippers and freight forwarders by providing competitive pricing, wider service coverage, and more choices, driving down transportation expenses. However, they also pose challenges for smaller shipping lines that are not part of major alliances, forcing them to focus on niche markets or specialized services.
In conclusion, shipping alliances offer cost efficiency, reliability, optimized operations, and sustainability benefits. While they present challenges that need to be addressed, new alliances will continue to shape the maritime sector in the future. With upcoming alliance reshuffles and potential disruptions in schedules, the shipping industry faces uncertainty, but managing these changes during the slack season after the Chinese New Year should be feasible. Can you please rewrite the content so that it is more engaging and informative?