Understanding the new shipping alliances

With the announcement of Gemini in January and Premier last month, the world of trade has had a shake up as traders and carriers look to understand the new shipping alliances.

But what is a shipping alliance and how do they affect the global dynamic? We give you an overview in this article.

What is a shipping alliance?

Shipping lines need to run efficiently in order to keep costs down. Therefore, they must prioritise their resources on the trade lanes which they can efficiently provide for. This includes the distribution of equipment, vessel transit times, deals with terminals and depots, physical presence, and other key factors which affect their ability to provide you a good service at a reasonable cost.

However, limiting their service to only these locations would mean missing out on other business. It would also mean that you would have limited access to areas with lower traffic, save a few carriers which would service all the demand.

Shipping alliances are where two or more carriers join forces to provide you with a wider, more efficient service. This is predominantly through vessel sharing, but can also include the use of liner services or a number of other “hub and spoke” processes which allow the carriers to stay competitive in the global market.

It is important to note that shipping lines do not dedicate their entire resource to an alliance. Therefore, the participation of the largest carriers does not necessarily mean the largest alliance.

What has caused the recent dynamic to change?

In Q1 this year, long-term collaborators Maersk and Mediterranean Shipping Company (MSC) announced that their 2M alliance would not be continued after this year. The partnership concludes its tenth year this year, leaving approximately 11% of global capacity to be redistributed. Maersk and MSC control over a third of worldwide shipping between them, so the dissolution of their alliance preluded a larger shift.

At the same time as the 2M announcement, Hapag Lloyd announced their departure from the THE Alliance, leaving the remaining members – Hyundai Merchant Marine (HMM), Yang Ming, and Ocean Network Express (ONE) – with an annual capacity of 3.3 million TEU (twenty-foot equivalent unit).

Then, Maersk and Hapag Lloyd announced they would begin a new shipping alliance in 2025: the Gemini Corporation.

Furthermore, as of the 25^th of April 2024, the Consortia Block Exemption Regulation (CBER) is no longer in effect in the EU. This regulation allowed carriers to form liner collaborations which were exempt from some EU anti-trust and compliance assessments – provided that certain conditions were met, such as holding a market share of less than 30%.

Now, all carriers will be subjected to these regulations – removing an incentive for lower market share alliances.

These factors in such a short timeframe have meant a reshuffle of shipping alliances both large and small.

Who are the major shipping alliances now?

Before, the major shipping alliances were 2M, Ocean, and THE. However, the shake up with the disbanded 2M Alliance and Hapag Lloyd’s departure from THE has resulted in a new set of agreements: Gemini, Ocean, and Premier.

Gemini Shipping Alliance

Although they will be the new shipping alliance in the market, the Gemini Corporation has the experience and resource of two major players – Hapag Lloyd and Maersk.

The Gemini Corporation will consist of over 340 vessels, serve seven major trade lanes, provide 57 services, and has a capacity of approximately 3.7 million TEU annually.

Many of Gemini’s ships are equipped to adopt cleaner fuels, highlighting the alliance’s focus on sustainability. With its significant capacity and future-ready fleet, Gemini is expected to claim the second-largest market share behind Ocean Alliance, making the competitive landscape more intense.

Ocean Shipping Alliance

The largest operational agreement between shipping companies, the Ocean Alliance has an annual capacity of approximately 4.3 million TEU.

The Ocean shipping alliance features prominent players CMA CGM, COSCO, Evergreen, and OOCL, with a focus on key Asian trade routes – including over a third of the market share for Asia-North America and Asia-Europe.

The Ocean Alliance has been in partnership since 2017 and was contracted until 2027. However, they recently confirmed that their collaboration has been extended until 2032.

Premier Shipping Alliance

Formed with the remaining members of the THE Alliance without Hapag Lloyd, the Premier Shipping Alliance is comprised of major lines Hyundai Merchant Marine, ONE, and Yang Ming.

The main focus of Premier will be East-West trade, providing flexibility, responsiveness, and volume. To this end, the Premier shipping alliance has already began negotiations with independent carriers for additional Vessel Sharing Agreements (VSA).

Like the Gemini Corporation, Premier will become active in February 2025.

Where is MSC in all this?

On Maersk’s announcement of leaving the 2M shipping alliance to form the Gemini Corporation with Hapag Lloyd, it was speculated that MSC could take Hapag’s place in the THE Alliance or strike out on their own.

It appears, for now, that they have chosen the latter. This is understandable as MSC is the largest shipping company in the world now, boasting nearly 850 vessels and an annual capacity of over 5.9 million TEU by themselves.

To put this into perspective, if both Maersk as the second-largest carrier and Hapag Lloyd as the fifth put 100% of their resources into Gemini, then they would have approximately 6.5 million TEU – just over 10% more.

Despite their size, MSC will have a shortfall in service provision in the absence of the 2M. To this end, they have agreed to VSAs with both the Premier shipping alliance for Asia-Europe and Zim Integrated Shipping for Asia-America trade lanes.

Want to know how the new shipping alliances affect you?

No need to worry. Whilst shipping alliances come and go, Cory Brothers has remained steadfast in providing you with an exceptional service for over 180 years.

Whether you need to discuss an update on service agreements, the ports covered by lines, or something else, our supply chain specialists are on hand to keep your goods moving around the globe. Contact us for more information.

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