HSBC: Mega ships, alliances risk more congestion, carrier dominance
A REPORT from the Hong Kong and Shanghai Banking Corporation (HSBC) says big shipping consortia, particularly the proposed Ocean Alliance, to unite CMA CGM, Cosco, Evergreen and OOCL, and the Maersk-Mediterranean Shipping Co (MSC) 2M union, stand to aggravate port congestion and break the market dominance of port operators.
The HSBC said that if the new alliance receives regulatory approval, it expects "erosion in bargaining power versus shipping lines, particularly for transshipment ports", though ports controlled by Cosco Pacific could benefit, reports Lloyd's Loading List.
"Bigger alliances also imply changes in peak demand and capacity challenges," said HSBC. "Similar to 4Q14/1Q15, when O3 and 2M were commencing, we could see port congestion in 2017 due to the restructuring of services."
The proposed Ocean Alliance, if approved by regulators, will be bigger than the 2M alliance of Maersk and MSC by fielding four of the top 10 box carriers to offer 40 services and deploy over 350 ships. 2M alliance of Maersk Line and MSC will offer 21 services and 185 ships.
"We expect the alliance to be slightly positive for OOIL [OOCL] as it would be part of a bigger alliance versus its current alliance, where a number of its partners are facing financial difficulties," said HSBC. "On the other hand, Hanjin and Yang Ming would be left to find alternatives, which may not be an easy task given their high leverage."
However, Drewry Maritime Equity Research described the decision of Hong Kong-based line OOCL to join with CMA CGM, Cosco Container Lines and Evergreen Line in the new Ocean Alliance as "surprising" due to the line's relatively limited capacity compared with the other players and its existing G6 alliance partners.
A REPORT from the Hong Kong and Shanghai Banking Corporation (HSBC) says big shipping consortia, particularly the proposed Ocean Alliance, to unite CMA CGM, Cosco, Evergreen and OOCL, and the Maersk-Mediterranean Shipping Co (MSC) 2M union, stand to aggravate port congestion and break the market dominance of port operators.
The HSBC said that if the new alliance receives regulatory approval, it expects "erosion in bargaining power versus shipping lines, particularly for transshipment ports", though ports controlled by Cosco Pacific could benefit, reports Lloyd's Loading List.
"Bigger alliances also imply changes in peak demand and capacity challenges," said HSBC. "Similar to 4Q14/1Q15, when O3 and 2M were commencing, we could see port congestion in 2017 due to the restructuring of services."
The proposed Ocean Alliance, if approved by regulators, will be bigger than the 2M alliance of Maersk and MSC by fielding four of the top 10 box carriers to offer 40 services and deploy over 350 ships. 2M alliance of Maersk Line and MSC will offer 21 services and 185 ships.
"We expect the alliance to be slightly positive for OOIL [OOCL] as it would be part of a bigger alliance versus its current alliance, where a number of its partners are facing financial difficulties," said HSBC. "On the other hand, Hanjin and Yang Ming would be left to find alternatives, which may not be an easy task given their high leverage."
However, Drewry Maritime Equity Research described the decision of Hong Kong-based line OOCL to join with CMA CGM, Cosco Container Lines and Evergreen Line in the new Ocean Alliance as "surprising" due to the line's relatively limited capacity compared with the other players and its existing G6 alliance partners.