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Overview of the Shipping Alliances Worldwide

Shipping alliances are an essential factor in the maritime transportation industry and international trade. In this article, we will delve into the details of "Shipping Alliances" and their significance in connecting the world through the seas.

Ocean Freight
Maersk Line and MSC Line

I. What are Shipping Alliances?

Shipping alliances are a form of collaboration among shipping companies, shipping lines, and related organizations in providing international maritime transport services. The goal of these alliances is to optimize resources and provide comprehensive services to shippers.

Shipping alliances are often formed as associations or joint ventures, allowing members to share vessels, infrastructure, and transport capabilities. This helps minimize transportation costs and enhance customer service.

II. Leading Shipping Alliances Worldwide

Before exploring the new shipping alliances, let's look back to the period before 2016. The three former shipping alliances were:

2M Alliance: Maersk and MSC

Ocean Three Alliance: CMA CGM, UASC, China Shipping

G6 Alliance: NYK Line, OOCL, APL, MOL, Hapag-Lloyd, HMM

CKYHE Alliance: K Line, COSCO, Hanjin Shipping, Evergreen, Yang Ming

These alliances once dominated the market. However, after COSCO acquired OOCL and the bankruptcy of Hanjin Shipping, THE Alliance, Ocean Alliance, and 2M+H have become the three dominant shipping alliances in the global maritime transportation market. So, let's explore the scale and influence of these three alliances.

2M Alliance:

Alliance name

Member shipping

2M Alliance

Maersk (owns Hamburg Sud), MSC and HMM (not official members but HMM participates in shipping exchanges with Maersk and MSC)

Ocean Alliance:

Alliance name

Member shipping

Oceam Alliance

CMA CGM, Evergreen, OOCL và COSCO Shipping

THE Alliance:

Alliance name

Member shipping

THE Alliance

NYK, MOL, K Line, Yang Ming, Hapag-Lloyd (merged with UASC)

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All three alliances not only boast an impressive scale with numerous members, but they also control up to 77.2% of global container capacity and 96% of the container capacity for all East-West transactions.

This means they wield considerable negotiating power and can exert pressure on various ports, creating more favorable conditions for all alliance members. This negotiating power leads to better customs tariffs and reduced high-volume prices. Simultaneously, it allows everyone involved to maintain competitiveness. Furthermore, these cost savings can be passed on to their customers.

III. Influence of Shipping Alliances in Global Trade

Shipping alliances play a crucial role in connecting the world through maritime transportation. Below are key points illustrating the importance of Shipping Alliances:

  • Maintaining the supply chain:

Shipping alliances help maintain global supply chain connections, ensuring efficient movement of goods from production to consumption.

  • Impact on prices and international trade:

The prices of products and international trade depend on maritime transport capabilities, and shipping alliances play a vital role in market stability.

These alliances are particularly crucial when considering operating costs, with transportation costs accounting for over 67% of total operational expenses. Within this 67%, 46% is related to fuel costs (bunker fee), and the remaining 21% is linked to port fees. Both of these costs can fluctuate at any time. In challenging economic conditions, shipping lines cannot provide services if their vessels are constrained on a specific route for several consecutive weeks, impacting the assurance of other routes. This is when shipping alliances come into play.

  • Facilitating the development of international trade:

Shipping alliances play a vital role in creating conditions for the development of international trade. They provide efficient cargo transportation capabilities, enabling countries to participate in the global market and develop their economies through exports and imports.

  • Competitiveness and choice for shippers:

Competition in the shipping industry allows shipping alliances to offer various transportation choices for shippers. This translates to improved service quality and competitive prices, benefiting both shippers and cargo recipients.

IV. Benefits of Shipping Alliances for Shipping Lines and Shippers

1. Benefits for Shipping Lines

Shipping lines participating in alliances enjoy numerous benefits. Here are the advantages that Shipping Alliances bring to the participating shipping lines:

  • Financial benefits: The establishment of alliances helps shipping lines share risks and profits with each other.

  • Enhanced competitiveness: Shipping alliances can provide more comprehensive and flexible services, attracting a broader range of shippers.

  • Optimization of resources: By sharing vessels, infrastructure, and transport resources, shipping lines can optimize resource usage and reduce costs.

  • Expansion of networks: Joining a shipping alliance provides shipping lines with the opportunity to expand their networks and access new markets they may not have reached before.

2. Benefits for Shippers

When shipping alliances are established, shippers also gain significant benefits from their existence. Here are some crucial benefits that shippers receive:

  • Reduced transportation costs: Shipping alliances often have the capability to share vessels and optimize routes, helping minimize transportation costs to various markets.

  • Diverse and flexible services: Through collaboration, shipping alliances can offer diverse and flexible services, catering to the specific needs of each shipper.

V. Conclusion

Shipping alliances are not only a vital part of the shipping industry but also play a crucial role in connecting the world through the seas. Collaboration among shipping lines helps reduce costs, improve services, and maintain market stability. Alongside commitments to environmental protection and adaptation to global changes, shipping alliances contribute to building an efficient and sustainable maritime transportation system.

Contact info: Ryan Hoang - Global Network Department Email: Hotline: 0947 672 825


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