CMA CGM - COSCO Mega Alliance to Shake-up the Industry?

Maritime Activity Reports, Inc.

February 18, 2016

Graphic: Alphaliner

Graphic: Alphaliner

 Paris-based consultancy, Alphaliner, reports “a new mega alliance appears to be in the making,” as French container shipping major CMA CGM and its Chinese counterpart China COSCO lead efforts to set up a new carrier partnership. (Marine Link has reported about this last week. See "CMA-CGM and Cosco Alliance in the Offing?")

The duo is also seeking to also rope-in Evergreen and OOCL in a plan that could potentially split up three of today’s four main East-West alliances.

The movement that will radically alter the current liner shipping landscape and leave the eight remaining carriers of the Ocean Three, CKYHE and G6 alliances in the lurch.

"Discussions are believed to be still ongoing and the carriers involved have not yet publicly announced their plans,” Alphaliner analysts say.

CMA CGM however, already stated that it will pull APL out of the G6, once the French Line completes the Singaporean carrier’s acquisition in the second half of this year.

Evergreen is in a mourning period following the death of its founder Chang Yung-Fa on 20 January. The Taiwanese shipping line is thus not expected to make any announcements until the month-long silent period is over.

OOCL is understood to be reviewing its options after a high-level meeting with CMA CGM and COSCO in late January.

CMA CGM also commented that it hoped that COSCO-CSCL will join the Marseilles-based carrier in a new alliance partnership. However, COSCO has not yet revealed any post-merger alliance plans to follow the acquisition of CSCL’s container shipping operations, due to be finalised by the end of February. 

”The motivation is to from a strong and stable alliance that could challenge the 2M’s dominance in the East – West trades and to distance the ’CCEO’ from some of the weaker partners within the current alliances, which could be facing financial distress.” Alphaliner notes.

In August, Drewry Shipping Consultants Limited (Drewry) speculated on the impact that a merger between China COSCO and CSCL may have on carrier alliances and future carrier mergers in Asia, warning that the amalgamation could prove potentially damaging to industry competition.

The new grouping would challenge the market dominance of the Maersk and MSC 2M vessel-sharing agreement. The 2M alliance operates over 2.1m teu of capacity on across the three main east-west trades, followed closely by the CKYHE offering of just over 2m teu, the G6’s 1.8m teu and the O3’s 1.5m teu.

The “CCEO” (CMA CGM, Cosco, Evergreen and OOCL) would potentially be larger in capacity terms than the 2M.

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