Bigger consortia and alliances among container carriers will allow carriers to use assets more efficiently, meaning they are likely to “better fine tune vessel capacity to seasonal cargo demand,” according to Drewry.
In the most recent issue of its Container Insight Weekly, the London-based consultant wrote, “The balance between supply and demand in the headhaul direction of East-West trades should be better managed by carriers next year due to the introduction of bigger alliances and consortia.”
Drewry predicted that if the 2M alliance of Maersk and MSC passes muster, and CMA CGM aligns with China Shipping and United Arab Shipping Company in a consortia, four carrier groups would control 98.5 percent of trade on the Asia-Europe route:
- The 2M alliance of Maersk and MSC, 35.4 percent.
- The CKYHE alliance of Cosco, “K” Line, Yang Ming, Hanjin, and Evergreen, 25 percent.
- The possible CMA CGM/China Shipping/UASC alliance, 19.7 percent.
- The G6 alliance of APL, Hapag-Lloyd, Hyundai, MOL, NYK and OOCL, 18.4 percent.
Drewry noted that seasonal cargo flows on the Asia-Europe route, for example, can dip hundreds of thousands of TEU in the winter months.
“A drawback of vessels getting bigger is that withdrawing whole services during the winter season has become too ‘chunky’, particularly between Asia and Europe — hence the trend of cancelling sailings instead,” it said. The bigger the alliance, the “smoother the schedule disruption caused by an omission, and the more alternative sailings there are to cater for roll-overs etc. Moreover, port calls of other services can also be rationalized to help out.”
Drewry continued that “carriers have already become better at fine tuning capacity this year, and the process could become even easier in future due to a reduction in the number of players involved.”
It noted that freight rates could get better as a side effect of these developments, but it cautioned that “carriers’ tendencies to reduce rates to fill ships, and the fragmentation of the market between many competitors, run counter to price stability.”
