New beginning with New Alliances of shipping lines

Contents

1.        Introduction

2.        What is shipping alliance

   •        Analysis of 2M alliance for better understanding

3.        Ocean Alliance updates from February 2025 with capacity of each alliance.

4.        Benefits of Working Independently like MSC / Working in Alliance like other lines.

5.        How will be 2025 for the alliances – Situations and outcomes

6.        conclusion

1.       Introduction

Shipping industry has seen a lot of changes since 2020, moving forward there are significant Global alliance changes from February 2025 and we will discuss on it in the blog giving more clarity on different aspects. There has been major shipping alliance shift which is mainly done for gain benefits and to dominate the maritime industry. There has been one significant change – the dissolution of 2M alliance.

2.       What is a shipping alliance

Shipping lines form alliances to gain benefits by sharing the resources to increase efficiency / market reach /volume increase/ overall profit. Since decades shipping lines have been forming alliance according to their priorities. Its like pooling a car to office from a neighbourhood where 4 persons who already have a car share it together for to and fro journey to reduce the fuel cost.

To give more clarity on this we will explain this by analyzing the 2M alliance.

2M Alliance was formed in JAN 2015 between Maersk and MSC. It has been one of the largest alliances in history and has handled approx. 34% of global container Exim business at its peak. The agreement had the clause of termination after 10 years and after mutual agreement both the lines are separating from Feb 2025.

Benefit of alliance to both the lines: -

Together they had the largest share for the top three global trade lanes - Asia Europe Service / Trans-Pacific Service / Trans-Atlantic Service.

Cost saving – Sharing the space on vessels by reducing the operations cost. If we look into details – Usually shipping lines deploy largest vessels for Asia-Europe trade as it is the largest trade lane, these vessels have capacity of 24,000+ TEU per container and operational cost for each vessel is very high.  Thus by utilising one vessel by both the lines reduces the

•    fuel cost.

•    vessel operation cost – like port fee and administrative expenses.

•    Significant reduction in empty sailing of vessels.

  
  

This leads to reduction in overall cost and increase profit.

 For example - If both Maersk and MSC sends two different vessels and pick 12,000 container each after bearing all the cost, it would be better If they send one large vessel of capacity of 24,000 TEU and reduce the overall per container cost. (In shipping terms they calculate the over efficiency on per container cost which is CY – container yield)

Why the 2M alliance broke: -

At time of the agreement in 2015 the priorities of both the were different, while now

•        MSC wants to increase its share globally, they are acquiring / buying vessels to increase the capacity.

•        Maersk wants to give an end-to-end supply chain solution, they are expanding in warehouses/ road transportation / CHA etc, there present is not solely focused in container freight business.

Impact of 2M alliance dissolution: -

•        Loss to both shipping lines for increase in per container cost and reduction in per container CY- Container yield.

•        Major disbalance in space & demand in the market, It could be clearly seen in January 2025 first week when there was sudden hike in Ocean Freight and GRI were announced to be implemented by different shipping lines for Asia Europe trade lane.

   

3.       Ocean Alliance updates from February 2025

As shown in above image the global shipping alliances are changing sides and with dissolution of 2M alliance MSC has decided to move independently and it has certainly an upper hand globally in terms higher vessel fleet thus if well planned it can result to a fruitful outcome.

There are 3 big alliances at present and they will be sailing for the three major trade lanes – Asia-Europe, Trans-Pacific & Trans-Atlantic.

•        “Gemini Cooperation” - Maersk and Hapag will be forming an alliance.

•        “Premium Alliance” with ONE, HMM & Yang Ming.

•        “Ocean Alliance “- remains with same partners.

Below is the pictorial representation of the Alliance capacity details starting from Feb 2025. (The data is as per market information collected after discussion with shipping lines). It is being shared in pictorial form for better understanding.

4.       Benefits of Working Independently like MSC / Working in Alliance like other lines.

Either a line should work independently line MSC or form alliance depends on priority of the shipping line.

Below is a brief detail of pictorial representation of benefits in both the cases.

5.       How will be 2025 for the alliances – Situations and outcomes

Alliances can break and be reformed as per the Situation, and below are few conditions which can completely change the global maritime scenario.

6.       Conclusion

These alliances can bring substantial modifications in the shipping industry and there are many changes yet to come in 2025 in fields of global politics, war situation, rough planetary positions, trade war between USA and China, etc.

Few alliances will stay strong while few will break as small capacity shipping line alliance with a large shipping line creates a disbalance of per container cost saving by putting more pressure on the larger shipping line bringing fragility to the alliance.

More-over this is trend that keeps on changing and container shipping realignment is a repetitive cycle. Lets see what future brings.