Shipping companies plan to form a mega-alliance

22 March 2016

The container carriers are going through rough times. Over the course of one year, prices on the main routes have dropped by 21% to 44% on average. Shipping companies must take action to prevent operational and financial problems. As a result, the choice to form an alliance is made more frequently. Last year, Maersk and MSC announced to join forces in M2. Recently, CMA CGM, Coscocs, OOCL and Evergreen have also given notice of a planned cooperation.

The formation of alliances between shipping companies is a new phenomenon in the shipping industry. In the past, local governments discouraged this, since they did not want a few shipping companies to dominate the national shipping industry. Because of the poor financial situation that many container carriers are currently dealing with, this has changed. Overcapacity is putting prices under pressure. The forming of alliances is necessary for shipping companies in order to survive.

Container carriers that do not become part of an alliance won’t be able to offer as many services. In order for them to survive, they will also have to make some adjustments in their strategy. These shipping companies might also decide to form a new alliance. As an alternative, they might choose to specialize in niche markets.

With the arrival of (even) bigger alliances, flexibility will further reduce. However, this can also result in more peace and stability in the current rate war. Soon there will be more clarity on the possible new alliances and their effect on customers of shipping companies.