Hanjin's predicament raises questions over future of THE Alliance: Drewry
THE Hanjin bankruptcy leaves the proposed carrier grouping THE Alliance at a size disadvantage vis-a-vis its rivals, leaving Drewry's Container Insight Report wondering about a likely replacement carrier.
The container shipping industry is in a state of flux at the moment and nobody can honestly say they know for certain what the landscape will look like six months from now, observed London's Port Technology International.
Even before Hanjin Shipping filed for bankruptcy protection the industry was preparing itself for big changes to the make-up of the major shipping alliances, which from April, 2016 are scheduled to downsize from four to three.
However, Hanjin's impending demise and uncertainty surrounding new membership agreements and regulatory approval have clouded the picture.
Hanjin was one of six carriers along with Hapag-Lloyd, "K" Line, MOL, NYK and Yang Ming that in May, 2016 announced they would form THE Alliance to serve the east-west container trades from the Q2, 2017. The South Korean carrier was the second largest of the group with 460,000 TEU in nominal ship capacity in the East-West routes before it exited the stage in August.
Hapag-Lloyd's merger with United Arab Shipping Co (UASC) will add 315,000 TEU in East-West capacity so it bridges some, but not the entire gap.
Expectations that there would be an eighth partner (UASC being the seventh) were confounded when it emerged that the financially troubled Hyundai Merchant Marine (HMM) was in talks to join the world's two largest carriers Maersk Line and MSC in the 2M alliance.
Calculating potential market shares for the three proposed mega-alliances is complicated by the fact that HMM's deal with the 2M lines is yet to be concluded and that no one knows who will pick up Hanjin's capacity, which was five per cent of east-west ships in August.
In the US, the Federal Maritime Commission (FMC) has requested more information to consider the proposal of the OCEAN Alliance members CMA CGM, Cosco, Evergreen and OOCL, although there is no suggestion that the move will cancel or even push back the scheduled April start.
While acknowledging that making perfectly accurate market share projections is impossible at this stage, Drewry says that THE Alliance will be far smaller than its two rivals.
When Drewry asked the major carrier in THE Alliance, Hapag-Lloyd, how they planned to handle the loss of Hanjin there was no indication in its reply that they are looking to bring in anyone else.
Hapag-Lloyd said: "THE Alliance is creating its future product at the moment and it will be a very competitive product in all east-west trade lanes with attractive port coverage, comprehensive port-to-port connections and competitive transit times."
Surprisingly, in the current era of competitive-cooperation between lines there are still a few non-alliance affiliated carriers that might be targets. The uncertainty over what the industry will look like is less than ideal as shippers prepare tenders for shipping contracts.
Drewry's view is that with so much uncertainty, shippers will probably look to hedge their bets with the alliances at the beginning and see which one works best for them in the long-term.
THE Hanjin bankruptcy leaves the proposed carrier grouping THE Alliance at a size disadvantage vis-a-vis its rivals, leaving Drewry's Container Insight Report wondering about a likely replacement carrier.
The container shipping industry is in a state of flux at the moment and nobody can honestly say they know for certain what the landscape will look like six months from now, observed London's Port Technology International.
Even before Hanjin Shipping filed for bankruptcy protection the industry was preparing itself for big changes to the make-up of the major shipping alliances, which from April, 2016 are scheduled to downsize from four to three.
However, Hanjin's impending demise and uncertainty surrounding new membership agreements and regulatory approval have clouded the picture.
Hanjin was one of six carriers along with Hapag-Lloyd, "K" Line, MOL, NYK and Yang Ming that in May, 2016 announced they would form THE Alliance to serve the east-west container trades from the Q2, 2017. The South Korean carrier was the second largest of the group with 460,000 TEU in nominal ship capacity in the East-West routes before it exited the stage in August.
Hapag-Lloyd's merger with United Arab Shipping Co (UASC) will add 315,000 TEU in East-West capacity so it bridges some, but not the entire gap.
Expectations that there would be an eighth partner (UASC being the seventh) were confounded when it emerged that the financially troubled Hyundai Merchant Marine (HMM) was in talks to join the world's two largest carriers Maersk Line and MSC in the 2M alliance.
Calculating potential market shares for the three proposed mega-alliances is complicated by the fact that HMM's deal with the 2M lines is yet to be concluded and that no one knows who will pick up Hanjin's capacity, which was five per cent of east-west ships in August.
In the US, the Federal Maritime Commission (FMC) has requested more information to consider the proposal of the OCEAN Alliance members CMA CGM, Cosco, Evergreen and OOCL, although there is no suggestion that the move will cancel or even push back the scheduled April start.
While acknowledging that making perfectly accurate market share projections is impossible at this stage, Drewry says that THE Alliance will be far smaller than its two rivals.
When Drewry asked the major carrier in THE Alliance, Hapag-Lloyd, how they planned to handle the loss of Hanjin there was no indication in its reply that they are looking to bring in anyone else.
Hapag-Lloyd said: "THE Alliance is creating its future product at the moment and it will be a very competitive product in all east-west trade lanes with attractive port coverage, comprehensive port-to-port connections and competitive transit times."
Surprisingly, in the current era of competitive-cooperation between lines there are still a few non-alliance affiliated carriers that might be targets. The uncertainty over what the industry will look like is less than ideal as shippers prepare tenders for shipping contracts.
Drewry's view is that with so much uncertainty, shippers will probably look to hedge their bets with the alliances at the beginning and see which one works best for them in the long-term.