Can This Third-largest Shipping Alliance Make Waves?

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 World’s third-largest container shipping alliance is taking shape – Japan’s Big 3 Plus global 3

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World’s third-largest container shipping alliance is taking shape as Japan’s three largest shipping companies – Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K Lines (MOL) and Kawasaki Kisen Kaisha (“K” Line) – and three other carriers worldwide are teaming up.

The alliance with a combined force of around 620 vessels and container capacity of 3.5 million 20-foot equivalent units (TEUs) – the Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen, along with South Korea’s Hanjin Shipping, Germany’s Hapag-Lloyd and Taiwan’s Yang Ming Marine Transport – together makes nearly 18% of the global total.

Factors:

  • China’s economic deceleration cause container shipping rates to plummet.
  • Marine Shipping earnings of shippers continue to fall.
  • The world’s top and No. 2 container shippers, Denmark’s A.P. Moller-Maersk and Switzerland’s Mediterranean Shipping Company, are currently in an alliance that represents 27% of global fleet capacity.
  • The Nos. 3 and 4 companies, France’s CMA CGM and China Cosco Holdings affiliate Cosco Container Lines, in April formed a tie-up with two other shippers to control 24% of global capacity.

These factors made Japanese companies respond by teaming up to cover various routes which will help the new partners raise load ratios to ensure profitability, as well as avoid excessive competition.

Source: Nikkei Asian

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