Third Alliance Members Revealed

Global carriers Hanjin, Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming have agreed to create a new alliance, the companies announced today, confirming market rumors.

As disclosed, the alliance will be 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.

A binding agreement has been concluded by all partners and “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.

According to a joint statement, the new partnership will build “one of the leading networks in the container shipping industry combining approximately 3.5 million TEU or 18% share of the global container fleet capacity.”

All six partners operate fleets with more than 620 ships in total.

South Korean Hyundai Merchant Marine has been left out of the new agreement, most probably due to its financial troubles. Based on the latest reports, HMM is to become a subsidiary of state-owned Korea Development Bank (KDB) within a debt-for-equity deal so as to avoid the company from going bust.

In addition, the company has been in talks with ship owners since February on lowering freight rates.

This only leaves Dubai-based United Arab Shipping Company (UASC) which is currently in discussions with Hapag-Lloyd on a merger deal.

Based on the joint statement, the talks 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.

However, it is anticipated that UASC will become part of THE Alliance, which will increase the overall alliance capacity to more than 4 million TEU.

“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.“

The companies said that they would reveal more details on the services and port rotations when all necessary preparations are finalized.

Aside to 2M and the recently announced formation of the Ocean Alliance made up of CMA CGM, COSCO Container Lines, Evergreen Line and OOCL, this is the third carrier partnership agreement to emerge, thus replacing the current four alliances in 2017 and breaking up the CKYHE Alliance, Ocean Three and G6 as a result.

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