The Ocean Alliance could be the next major ship-sharing agreement to sink, possibly sometime this year, as its members chart different strategies and look to gain market share during the current \u201crate war\u201d among ocean carriers, industry analyst Lars Jensen said Wednesday.<\/p>\n
Speaking at the Journal of Commerce\u2019s TPM23 conference in Long Beach, Jensen said ocean carriers face a market similar to the one seen during the 2008-09 financial crisis when a massive buildup of ship capacity came up against weakening demand.<\/p>\n
While demand could recover should inventory destocking occur through the spring and US consumers keep spending, Jensen said the industry faces other headwinds, such as political scrutiny over the alliances\u2019 anti-trust exemptions and higher costs from stringent carbon emissions rules. The result, he added, is that carriers are thinking more about \u201cwho do I want to spend the next few years with\u201d as has happened with the pending dissolution of the 2M Alliance.<\/p>\n
\u201cIt\u2019s a normal downcycle we are going through, then there are some elements that are slightly different,\u201d Jensen, CEO and partner of Vespucci Maritime and a Journal of Commerce analyst, said. \u201cRates are coming down faster than they went up. It is a rate war.\u201d<\/p>\n
\u201c2M is the just the first domino to fall,\u201d he added. \u201cWhen it was formed, you had two parties with the same strategic interest. Now you have two parties whose interests are no longer aligned.\u201d<\/p>\n
Cosco has second-largest orderbook<\/p>\n
Jensen, one of the first to predict the breakup of 2M, said at the time that Mediterranean Shipping Co.\u2019s\u00a0 large orderbook of new vessels allowed it to operate on a standalone basis across many trade lanes, without having to share space on Maersk vessels. A similar dynamic could play out with Ocean Alliance member Cosco Shipping, which has the second-largest orderbook of new ships behind MSC, Jensen said.<\/p>\n
Cosco faces renewed urgency to fill those new vessels due to a loss of market share over the last two years that Jensen attributed to China\u2019s COVID-19 lockdowns and the resulting shipping delays out of the country.<\/p>\n
\u201cI\u2019m going to expect Cosco to be very aggressively going after market share,\u201d Jensen said. \u201cWho\u2019s the easiest prey to go after? That would be customers already on your ships through your alliance partners.\u201d<\/p>\n
\u201cThat\u2019s not going to sit well with [Ocean Alliance members] CMA CGM and Evergreen Marine,\u201d Jensen said, adding that Taiwan\u2019s Evergreen faces the additional tension of working with a China-based carrier.<\/p>\n
Indeed, Cosco recently upsized capacity on an Asia to US Gulf service it operates on a standalone basis, but that is also offered through the Ocean Alliance. The new capacity on that Cosco service now evenly matches one that CMA CGM also offers on a standalone basis to the US Gulf.<\/p>\n
Likewise, CMA CGM is pursuing a strategy not similar to Maersk\u2019s, \u201cbut somewhere in the same direction,\u201d Jensen said.<\/p>\n
As does Maersk, CMA CGM looks to own US terminal assets after striking acquisition deals on the US East and West coasts. CMA CGM\u2019s North American President Peter Levesque said during his appearance at TPM23 Tuesday that owning terminals allows the carrier to \u201cdetermine our own destiny.\u201d<\/p>\n
The Ocean Alliance\u2019s agreement is set to expire in 2027, Jensen said, but he noted the current market uncertainty and the pending breakup of 2M could hasten a decision not to renew the Ocean Alliance in 2023.<\/p>\n
Regarding THE Alliance, Jensen said \u201cit\u2019s slightly stable\u201d due to similar operating strategies and less aggressive ship ordering. However, he said the changing carrier landscape may make THE Alliance\u2019s two biggest members, Hapag-Lloyd and Ocean Network Express (ONE), reconsider their partnerships. Jensen even posited that the two could decide to merge as a way to take on ever-larger ocean carriers.<\/p>\n
\u201cThis is not the first time we\u2019ve seen alliances break up and get re-formed,\u201d he said. \u201cThe challenge is once everyone\u2019s dance card is open, Hapag and ONE will have some thinking to do about who do we actually want to be lined up with now that everything is shifting.\u201d<\/p>\n
Source:<\/p>\n
Angell, M. (2023, March 1). TPM23: Ocean Alliance could be next domino to fall after 2M: Analyst. Retrieved March 9, 2023, from https:\/\/www.joc.com\/article\/tpm23-ocean-alliance-could-be-next-domino-fall-after-2m-analyst_20230301.html<\/p>\n","protected":false},"excerpt":{"rendered":"
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