2M Alliance adjusts Asia-North Europe network to better utilize mega-ships
The 2M Alliance of Maersk Line and Mediterranean Shipping Co. will cut the number of direct port calls across their Asia-North Europe network to eliminate overlapping port pairs in a move to better deploy their mega-ships on the trade.
Reducing the number of direct calls in the network would improve reliability while the fewer port stops would make it possible to maintain competitive transit times, the carriers said. A key enabler for the adjustments was the more effective deployment of large container vessels across the five Asia-North Europe services in the 2M network.
“We are utilizing our scale to deliver a better product,” said Vincent Clerc, Maersk Line chief commercial officer. “With the largest network and the deployment of an increasingly uniform fleet of ultra-large container vessels, we maintain our extensive direct coverage while focusing each service towards best in class transit times to specific markets on the trade.”
The carriers are focusing on strengthening their products into Germany and the Netherlands, with westbound transit times from Asia to Rotterdam and Bremerhaven improving by as much as five days. Eastbound transit time between Rotterdam and Shanghai would be reduced by five days.
Clerc said Maersk Line had drawn on experience from the first year of operations of the 2M alliance when adjusting the network. Launched in the beginning of 2015, the 10-year agreement with MSC is the only global alliance not affected by the current shake up among global container shipping alliances.
“Our improved network is the result of a stable, maturing alliance seeking to address current customer-felt pain points. It strengthens our commercial offering and offers shippers a stable choice in times where other alliance networks await reshuffling,” said Clerc.
Three of the four major alliances will be completely redrawn from April 2017 following merger activity that will see CMA CGM acquiring NOL and its liner unit APL, and the coming together of the parents of the two major Chinese carriers, China Shipping Container Lines and Cosco Container Lines. From April there will be three alliances, 2M, Ocean Alliance and THE Alliance.
In a recent interview with JOC.com, Maersk Line chief executive officer Soren Skou also highlighted that the 2M was well established and would provide much-needed stability to the market while other carriers shifted around.
“We hope to be seen as a safe haven with stability and minimum of disruption and will hopefully see more business,” he said. “We did our part in the first quarter of last year, moving around 200 ships in a new network with all the disruption to customers and phase-in costs.”
Skou warned that the new alliances could introduce instability into the market if they competed aggressively to grow market share, an approach that Maersk itself is blamed for.
Alphaliner said Maersk’s ability to grow volume at a faster pace than the 12 other carriers that reported first-quarter earnings while delivering better operating margins was a sign of how Maersk was pulling away from the rest of the container shipping industry.
“Maersk’s decision to pursue market share contributed to the decline in freight rates,” said Alphaliner, adding that in the first quarter “when most competitors were trying to curb capacity growth, Maersk deployed off-schedule extra loaders on both the Asia-Europe and trans-Pacific routes.”
Weak freight rates on the major trades will see Maersk Line paying more attention to the spot market. Skou said on Asia-Europe, Maersk Line’s contract vs spot market rate ratio has risen to 50:50 as the line adjusted to the market. “Every year we have to make a call on how much to sign off on contracts — anything from three months to one year contracts, generally, although we do have a few contracts that run longer than that — and how much to be on spot booking,” he said.
“That’s a call of the state of the markets and how we see things developing. This year the contract rates on Asia-Europe and the trans-Pacific are much, much lower than we saw last year.”