They also include all of the top 10 container lines. The three major shipping alliances collectively account for 80% of the shipping market. In contrast, Hapag-Lloyd has been collaborating in partnerships since 1989 and acquired various carriers, but never bought mega-ships. It did not engage in alliances until 2015. For a long time, MSC focused on organic growth by acquiring ships rather than shipping firms. This becomes clear when you look at the different strategies of MSC and their German competitor, Hapag-Lloyd. But, in the end, every carrier makes its own strategic choices. Carriers, who are strong in complementary regions with a broader network, increase service offerings to their customers.Įntering alliances seems to be a good fit for smaller (extended service coverage) and larger shipping lines (rationalization of resources). This usually happens with a lot of experience and partnerships between carriers. Why? Most shipping companies are stronger in certain areas. Research shows that extending coverage and providing more routes is the most important motivation for participating in strategic alliances.
Moreover, collaboration helps carriers to improve service offerings to their customers through a more comprehensive global shipping network. You can read more about the vessel agents and their role in the shipping alliances right here 💡 Networking gives better services Because substantial cost savings (economies of scale) can only be achieved if partners are willing to collaborate. As well as to share vessels to guarantee high utilization rates. In the end, shipping alliances are tools used to acquire bigger ships together. Variable costs that can be reduced through the usage of shared resources include many things not only ships. Ship size significantly increased to mega-ships of more than 20,000 TEUs to generate lower costs per transported container. Their business is mainly a commodity since containerization has brought down transport costs. Shipping lines are under high pressure to offer low prices to their customers as container transportation. Collaboration between carriers, for instance, through a vessel sharing agreement (VSA) can mitigate this risk and increase utilization rates. They will sail irrespectively of their utilization rates. A weekly liner service between different ports requires investment in a set of ships. The high fixed-cost structure of shipping lines is one of the main arguments for shipping lines to collaborate. Shipping alliances can help carriers facilitate low prices and broad service coverage through economies of scale and economies of scope. These three alliances account for 80% of the global container market, according to Alphaliner’s ranking of all the shipping lines.īut how do shipping alliances differ from one another, and why did HMM decide to join THE Alliance? Benefits of shipping alliances They were formed to facilitate two elements that ocean carriers compete on: low prices and broad service coverage. Three major shipping alliances (2M, THE Alliance, and Ocean Alliance) were formed in 2017. “Hyundai Merchant Marine (HMM) is to join THE Alliance when its slot charter agreement with 2M expires next April”, according to the Loadstar. Recently, shipping alliances have been in the news: Do you want to know more about three of the major shipping alliances worldwide and their benefits? Then keep reading 👇
As the alliances make it possible to have lower prices and offer a larger variety of services. Shipping alliances have become the big thing for many shipping lines.
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