Mitsui O.S.K. Lines, Nippon Yusen Kaisha, “K” Line, Hanjin, Hapag-Lloyd, and Yang Ming have all agreed to create a new alliance covering 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 Alliance is scheduled to begin operation in April 2017, subject to approval of all relevant regulatory authorities. The initial term of the cooperation will be five years. The new partnership will build one of the largest networks in the container shipping industry combining approximately 3.5 million TEUs or 18% share of the global container fleet capacity. 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. It is anticipated that UASC will become part of The Alliance, which will increase The Alliance’s overall capacity to more than 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.”
In an environment marred by over 30% oversupply of vessels and rock-bottom freight rates, alliance partners share vessels, networks, and port calls in an effort to cut costs. It’s becoming more and more imperative to become part of an alliance, as seen last month with CMA CGM and China’s Cosco Group saying that they would be forming an alliance as well with Orient Overseas Container Line and Evergreen Marine. All of these alliance formations have been in response to the two largest shipping lines, Maersk and Mediterranean Shipping, forming their “2M” alliance.
“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. “The unique product will 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. ”