Ocean Alliance ‘In a Very Strong Position’ After Extending Vessel-Sharing Commitment
As one container shipping alliance prepares its upcoming dissolution next year, another will hold strong through 2032.
Ocean carriers CMA CGM Group, Evergreen, Cosco Shipping and subsidiary Orient Overseas Container Line Limited (OOCL) have agreed to extend their vessel-sharing capacity another five years, putting to bed any concerns that the alliance would end upon its 2027 expiration date.
More from Sourcing Journal
Bed Bath & Beyond in Yet Another Legal Battle With Ocean Carrier
Container Ships Spurn Suez Canal as Houthis Tout 'Submarine Weapons'
The CEOs of the four container shipping firms convened in Shanghai early Tuesday to sign a memorandum of understanding to extend the alliance, which was first formed in 2017.
Uncertainty floated through the container shipping industry last year when Maersk and Mediterranean Shipping Company (MSC) unveiled they would discount their 2M alliance in 2025. That doubt crept up even further in January when Maersk and Hapag-Lloyd said they would enter into a vessel-sharing agreement of their own, known as the Gemini Cooperation.
When Hapag-Lloyd decided to exit THE Alliance (THEA), it left partners like Ocean Network Express (ONE), HMM and Yang Ming in the dust. Without Hapag-Lloyd, that network will comprise 11.6 percent of total 20-foot equivalent units (TEUs), lending to the belief that one of the Ocean Alliance members would instead jump ship to THEA.
But the Ocean Alliance commitment has brought back a sense of assurance that there won’t be significant operational changes for shippers working with these liners. Collaborations like these are aimed at expanding liners’ global service and capacity levels, which can facilitate more container movement, all while cutting costs through sharing port terminals and inland logistics networks.
According to Tony Mason, an associate at maritime consultancy Drewry, the changing landscape across the container shipping alliances isn’t going to have a significant impact on how ocean freight competition is regulated.
“The alliances are going to be in no worse place than previous, as far as competition law is concerned,” Mason said in a webinar held Tuesday. “In a way, the competition authorities are going to see four major services replacing three major services.”
With the Ocean Alliance staying put, the collaboration will have the highest market share among global container shipping firms as of 2025, with CMA CGM, Cosco, Evergreen and OOCL accounting for 29.1 percent of total 20-foot equivalent units (TEUs). This outpaces the soon-to-be Gemini Cooperation’s 20.6 percent market share, as well as the MSC’s 19.9 percent on its own, according to data from Alphaliner.
“Ocean are dominant, and they will become slightly more dominant,” Mason said. “Whether that’s too dominant or not, in who’s judgment, Ocean’s market shares will not change. The customers will decide as to how they spread their business between the different players. We do certainly see that Ocean’s position relative to the other players gives them an advantage out of this.”
Among CMA CGM, Cosco, Evergreen and OOCL, the four ocean carriers operate 1,337 vessels in total. The companies also have 117 ships in their orderbook that will be brought online in the future.
Ocean has the biggest orderbook among the major alliances, at roughly 35 percent of TEU capacity of its current fleet, noted Drewry managing director Tim Power in the webinar. The size of the orderbook could be a major reason the Ocean Alliance decided to stick together.
“One of the biggest takeaways of all this, is that maybe the news that the Ocean Alliance has been extended is not a surprise,” said Power. “It’s got the largest network, it’s got the highest number of loops and it’s got the biggest orderbook. An important conclusion coming from us is they look in a very strong position.”
The sheer size of the fleets of the four carriers may give Ocean an advantage in unit costs, Power noted.
“If you charge $100 per TEU for transshipment costs, which can be done in a lot of places for a lot less,” Power said. “You can go a long way for $100 for a big ship. It is possible that Ocean’s network gets it cost leadership.”
The Ocean Alliance currently has the largest number of loops of all East-to-West trades, expect for the trans-Atlantic route. Of the 87 loops deployed across the three major alliances, Ocean operates on 40 of them. Drewry projects that number will stay the same after 2M and THEA realign next year.
Ocean will cover seven trade lanes: Asia to the U.S. West Coast; Asia to the U.S. East Coast; Asia to the Middle East; Asia to the Mediterranean; Asia to Northern Europe; Middle East to India/Europe; and trans-Atlantic.
