Ocean Alliances: Navigating the Waters of Global Shipping Partnerships

Introduction

In the ever-evolving world of global logistics, ocean alliances have become a crucial element in shaping the maritime shipping landscape. These strategic partnerships between major carriers have transformed how goods move across the world's oceans. At FreightAmigo, we understand the importance of staying informed about these alliances and their impact on international trade. In this comprehensive guide, we'll dive deep into the world of ocean alliances, exploring their structure, significance, and how they affect businesses engaged in global commerce.

Recent data from industry reports highlights the continued dominance of ocean alliances in global trade:

• The three major alliances still serve the majority of global trade routes
• Alliance members control over 80% of global container capacity
• Alliances help carriers optimize vessel utilization and reduce operating costs

What Are Ocean Alliances?

Ocean alliances are cooperative groups of carriers that enter into vessel-sharing agreements to maximize their coverage of the global shipping market. Within each alliance, carriers pool their fleets of container ships, allowing members to access not only their own vessels but also those owned or chartered by other alliance partners. This collaborative approach enables carriers to extend their service offerings and geographic reach without the need for massive individual fleet expansions.

The foundation of these alliances lies in their vessel-sharing agreements, which allow carriers to move containers on behalf of one another. This system of cooperation helps alliance members optimize their resources, reduce operational costs, and provide more comprehensive services to their customers.

Recent Developments in Alliance Structures

While alliances continue to dominate global trade routes, there have been some interesting shifts in recent years:

• Since 2020, capacity constraints have led to the launch of new services outside traditional alliance vessel-sharing arrangements
• Many of these new services have been initiated by alliance members themselves
• This trend is likely temporary, driven by high demand and favorable pricing conditions
• Established alliance services are expected to remain largely unchanged

The Three Major Ocean Alliances

Currently, there are three major ocean alliances dominating the global shipping industry. Let's take a closer look at each one:

1. 2M Alliance

The 2M Alliance consists of two of the world's largest shipping companies:

• Maersk
• MSC (Mediterranean Shipping Company)

These two giants entered into a ten-year vessel-sharing arrangement in 2015, covering key Transpacific, Transatlantic, and Asia-Europe routes. The alliance also has a strategic cooperation agreement with ZIM, further expanding its reach and capabilities.

It's worth noting that MSC, Maersk, and ZIM also operate some Transpacific and Transatlantic services independently, outside of their alliance agreements.

2. Ocean Alliance

The Ocean Alliance brings together four major carriers:

• COSCO
• OOCL (acquired by COSCO in 2018)
• Evergreen
• CMA CGM

This alliance has a strong presence in various trade lanes, particularly in Asia-North America and Asia-Europe routes. Interestingly, CMA CGM and COSCO also operate some non-alliance services on Transpacific trade routes, demonstrating the flexibility that carriers maintain even within alliance structures.

3. THE Alliance

THE Alliance comprises four carriers:

• Hapag-Lloyd
• ONE (Ocean Network Express)
• HMM (formerly Hyundai Merchant Marine)
• Yang Ming

This alliance has recently been notable for increasing its service offerings to U.S. Gulf ports on Transatlantic routes. All East-West services operated by these members fall under the alliance's umbrella.

Market Share and Trade Lane Dominance

The influence of these alliances varies across different trade lanes. Let's examine their market shares in key regions:

Asia-North America Trade Lanes

On these crucial routes connecting the world's largest economies:

• The Ocean Alliance leads with over one-third of the market share
• 2M follows closely, controlling just over a quarter of the market

Asia-Europe Trade Lanes

For shipments between Asia and Europe:

• The Ocean Alliance dominates with nearly 40% of the market share
• 2M trails slightly behind

Europe-North America Trade Lanes

On Transatlantic routes:

• 2M takes the lead with over 40% of the market share
• The Ocean Alliance holds the second position

It's important to note that the volume of trade on each lane significantly impacts the value of market share. High-volume routes naturally offer more opportunities for carriers and alliances to assert their dominance.

Technology Standardization Efforts

While ocean alliances primarily focus on commercial cooperation, several leading carriers have recognized the need for technological standardization in the industry. In 2018, a group of major players formed a nonprofit organization to address the challenges arising from a lack of standardization in Digital Logistics Platform technologies.

This initiative, though not officially tied to the alliances, includes members from various alliances:

• Maersk (2M)
• MSC (2M)
• CMA CGM (Ocean Alliance)
• Hapag-Lloyd (THE Alliance)
• ONE (THE Alliance)

The group's focus on promoting digitalization, standardization, and interoperability in container shipping demonstrates the industry's commitment to technological advancement beyond alliance structures.

Impact on Importers and Exporters

For businesses engaged in international trade, understanding ocean alliances can provide valuable insights into shipping strategies. Here are some key considerations:

Alliance Operations and Their Benefits

In many cases, the inner workings of alliances may not directly impact importers and exporters. The carriers have structured these partnerships to create industry-wide advantages, which often benefit shippers indirectly. Many companies prioritize factors such as pricing, transit times, and reliability over the specific vessel or carrier moving their cargo.

Strategic Booking Considerations

When booking shipments, there may be some strategic choices to consider:

• Alliance membership could be a tie-breaker when choosing between carriers with similar offerings
• Consider the overall performance and reliability of an alliance when selecting a carrier
• Explore additional benefits that might be available through alliance-member carriers

At FreightAmigo, our Digital Logistics Platform can help you navigate these choices by providing comprehensive comparisons of carrier options, including alliance-related factors. Our system allows you to easily compare door-to-door freight quotes for various modes of transport, including services offered by alliance members.

Focus on Visibility and Performance

While alliance structures are important to understand, many shippers prioritize factors such as:

• Real-time tracking capabilities
• Timely notifications
• Overall performance and reliability

FreightAmigo's Digital Logistics Solution offers advanced shipment tracking that connects with more than 1000 reputable airlines and shipping lines, ensuring you have visibility into your cargo's status regardless of the alliance or carrier handling it.

Conclusion

Ocean alliances play a crucial role in shaping the global shipping landscape, influencing capacity, routes, and service offerings. While the intricacies of these partnerships may not always be directly visible to importers and exporters, understanding their structure and impact can provide valuable insights for strategic shipping decisions.

As the industry continues to evolve, staying informed about alliance dynamics, market shares, and technological advancements will be key for businesses engaged in international trade. At FreightAmigo, we're committed to helping you navigate these complex waters with our comprehensive Digital Logistics Platform and expert support.

Whether you're comparing quotes, tracking shipments, or seeking to optimize your supply chain, our solutions are designed to provide you with the tools and insights you need to make informed decisions in this alliance-driven shipping environment. Contact us today to learn how we can help you leverage the power of ocean alliances and digital logistics solutions to streamline your international shipping operations.

References

Nerijus Poskus, "Ocean Alliances: Everything You Need to Know", https://www.flexport.com/blog/ocean-alliances-everything-you-need-to-know/