To strengthen their share in the container market, shipping companies Nippon Yusen Kaisha, “K” Line, Hanjin, Hapag-Lloyd and Yang Ming have agreed to create a new alliance covering all East-West trade lanes between Asia and Europe, USA and Middle East.
The Alliance, as the network is called, will pool 600 vessels with around 3.5 million TEU – about 18% of the global container fleet. The main benefits according to the companies are faster transit times, higher frequency sailings and expanded port coverage.
The carriers inked the five-year cooperation deal (which is still subject to regulatory approval) firstly to weather the current market downturn and secondly to counter similar moves by other container competitors. The move follows the inauguration of the Ocean Alliance by France’s CMA-CGM, China Cosco Shipping, Evergreen and OOCL formed Ocean Alliance, earlier this year. Meanwhile Maersk and MSC have been in a partnership, 2M, since last year.
The Alliance’s share of the global fleet could potentially rise to over 20%, should talks between Hapag Lloyd and the United Arab Shipping Company (UASC) result in a merger of the two companies. Currently, Hapag Lloyd and UASC are discussing if and how a merger would benefit both enterprises. The merger would create an estimated group value of $9 billion.