THE Alliance Emerges from Scramble as HMM Continues To Struggle


Amidst the alliance scramble that began in April, a new alliance has developed between six carriers. Known as “THE Alliance”, the efforts to form this alliance was led by German carrier Hapag-Lloyd and includes Taiwan carrier Yang Ming, South Korean carrier Hanjin, as well as the Japanese carrier trio K Line, NYK, and MOL. This five-year agreement is expected to take effect beginning April 2017.

It is important to note that former alliance carriers HMM and UASC were notably missing from this newly-formed alliance. However, the more-than-likely merger between Hapag-Lloyd and UASC is all but a guarantee that the Dubai-based carrier will join the alliance soon. Rolf Habben Jansen, the chief executive of Hapag-Lloyd, briefly discussed this topic, mentioning that “it is anticipated that UASC will become part of THE Alliance”.

Major concerns regarding the South Korean carrier HMM have developed further after news of this alliance broke out. The financially-struggling carrier issued a statement regarding its absence from THE Alliance, stating that the alliance is “tentative by its nature, and its member companies are yet to be finalised.” The carrier is looking to join the alliance in early June, following the scheduled completion of the company’s business normalisation.

HMM’s main creditor, Korea Development Bank (KDB), testifies to this notion, stating the HMM’s membership in THE Alliance is simply being postponed and that the carrier remains to have the bank’s full support. KDB have been actively appealing to all groups, including stakeholders and other financial institutions, to “join hands supporting HMM”, insisting their cooperation is essential to the success of the debt-ridden HMM. As the landscape of the industry continues to shift, all eyes are on HMM to see what actions the carrier will take in order to stay afloat and find success again.


Additional Information:

Hapag-Lloyd Unveils THE Alliance (The Maritime Executive)

New Alliance Set to Take on 2M, Ocean Alliance (JOC)

Hapag-Lloyd and Asian Lines Form Six-member Alliance (Lloyd’s List)

HMM’s Joining to THE Alliance ‘Just A Matter of Time’ (World Maritime News)

The Value of Stability within the Alliance Scramble


Earlier this year in April, France’s CMA CGM announced that it would be joining a new carrier alliance next spring. The alliance, known as Ocean Alliance, is newly formed and will include Asian carriers Cosco, Evergreen, and Orient Overseas Container Lines. This decision leaves three currently existing alliances (G6, CKYHE, and Ocean Three) falling short of partners and in need of replacing their members and rerouting their network.

What began as potential merger negotiations between German carrier Hapag-Lloyd and Arab carrier UASC has now appeared to become efforts to form a new alliance, consisting of all the remaining members of G6, CKYHE, and Ocean Three, as well as carrier Hamburg Süd. The landscape of the container market seems to be evolving into a field marked by three major alliances: Ocean Alliance, the unnamed alliance headed by Hapag-Lloyd, and the currently existing alliance 2M.

The 2M alliance between Swiss-based company MSC and industry-leading company Maersk Line was formed last year and is expected to last until 2025. Maersk Line CEO Søren Skou expressed his confidence and relief in not having to partake in this current alliance commotion, stating: “We are pleased that we don’t have a horse in this race right now.” He believes that the alliance scramble will put the 2M alliance at an advantage.

Every time a new alliance is formed, companies must reroute their network of vessels. This additional cost will put increased pressure on the companies as well as their relationships with customers. Skou believes another advantage 2M holds is their alliance size. Despite being the largest alliance by capacity, all decisions will only have to be agreed upon between two carriers. This allows for quicker network reviews that will lead to “improved efficiency and fewer costs”. Whatever the outcome, there is no doubt that this alliance scramble will result in a great shift within the field.


Additional Information:

Container Operators China Shipping Group, CMA-CGM Form Ocean Alliance (WSJ)

Maersk Line CEO Sees Advantage in Alliance Commotion (Shipping Watch)

Hapag-Lloyd and United Arab Shipping in Merger Talks (WSJ)

MSC: 2M Stands to Gain from Alliance Shake-ups via Consolidation (JOC)