Proposed Mega-Containerships Alliance 2M: Analysis

Maersk and MSC have just announced a mega vessel sharing agreement that will replace their failed P3 alliance early next year. It will be smaller, and compare well in size with the G6 and CKYH alliances – but what about CMA CGM? Drewry Maritime Research consider the question in their latest 'Container Insight Weekly' excerpted here as follows:

Maersk and MSC have taken on board China’s objections to the P3 alliance by coming up with a new vessel sharing arrangement called 2M that they hope will be agreed by all regulatory authorities before the beginning of next year. Out has gone CMA CGM, in order to bring the agreement’s market share down to more acceptable levels, and in has come a much simpler joint co-ordination committee to monitor the carriers’ network on a daily basis.

The objective remains the same – namely to reduce costs by sweating assets more efficiently between Asia/Europe, Asia/US and Europe/US, but as port rotations and vessel sizes have not yet been clarified, it is not possible to say how their market shares will change, or their undeniable savings compare with that envisaged by P3.

Drewry’s analysis shows that on the Asia-North Europe trade route, Maersk and MSC currently have a 32% share of all effective westbound vessel capacity, which is more than the 30% market share threshold normally allowed under the European Union’s consortium regulation, so will require close scrutiny [see Figure 1 shown here, and noted: Effective vessel capacity = total vessel capacity less estimated space allocated to wayport and out of scope cargo
; P3 = Maersk, MSC and CMA CGM; CSAV assumed to be independent of Hapag-Lloyd].

Maersk currently provides 21.3% on its own, and MSC/CMA CGM provide another 21.2% through joint services shared fairly evenly, which would have given the P3 alliance a much bigger share of 42.5%. Only six weekly services are planned by 2M instead of nine, but the VSA will still be the trade lane’s largest.

On the Asia/USWC route, 2M is planning four weekly services, whereas P3 was expecting to run six. At present, Maersk, MSC and CMA CGM share four weekly schedules. Between Asia and the USEC, two services will be provided, the same as at present, but two less than planned by P3.

On the US-North Europe route, 2M will operate three weekly services – the same number planned by P3, which reflects the fact that CMA CGM’s capacity share on the route is relatively small.  2M will probably be the second-largest alliance in the trade lane, after G6, in Drewry’s estimation.

As 2M will not include joint marine operations, with each party looking after its own duties, including stowage, voyage planning and port operations, service quality could be very different to that envisaged by P3. Will a shipper loading a container on an MSC ship really get the same schedule reliability as when loading on a Maersk ship, for example, as Drewry has consistently recorded a lower level of reliability for MSC?

Maersk will want to continue its Daily Maersk service guarantees between Asia and Northern Europe, which could create further friction between the two new partners.
It is not yet known whether 2M will negotiate joint operational contracts. If this does happen, it will be a concern to terminal and intermodal service operators, but an opportunity for the larger operators to secure more market share.

A bigger concern will be the future of CMA CGM, as it has been sharing vessels with MSC between Asia and Northern Europe, and with Maersk between Asia and the Mediterranean, since 2011, so will not be able to fill its ULCVs on its own reasonably. The game of musical chairs of the mega-alliances means that CMA CGM will now have to seriously consider a closer East-West vessel-sharing arrangement with someone else, therefore, the most obvious candidates being UASC and CSCL. Both have recently ordered 18,000 teu mega-ships, and have worked with CMA CGM in the past – but there are other options.

They may be needed, as CMA CGM has 28 ships of 9,000 teu on order, some of which are more suitable for North-South trades.

Drewry's view
2M will become the largest alliance on the Asia-Europe route, if approved. Like other alliances, it will help reduce costs, and should be allowed.

Source: Drewry Maritime Research