Container Analytics
with Ben Meyer
Hamburg Süd must feel like the prettiest girl at the dance these days. Speculation about the German ocean carrier has been running rampant the past few weeks, as industry analysts have predicted the imminent expansion of the Ocean3 Alliance of CMA CGM, China Shipping Container Lines and United Arab Shipping Co. to include Hamburg Süd, despite the fact that CEO Ottmar Gast has said there is no such formal negotiation underway.
Maritime consultant Drewry recently went as far as to say it’s only “a matter of time” before the Ocean3 becomes the “Ocean4,” but just last year Hamburg Süd was rumored to be in merger talks with fellow German-owned liner Hapag-Lloyd. Hapag-Lloyd is a member of the G6 Alliance along with APL, MOL, OOCL, NYK and Hyundai Merchant Marine.
Although the four major alliances — the Ocean3, G6, 2M and CKYHE — currently only operate in the major east-west trades, it is in the smaller north-south trades that Hamburg Süd would have the greatest impact on alliance market share and service offerings. Hamburg Süd, on the other hand, would potentially benefit from greater access to the Asia-Europe/Mediterranean, transpacific and transatlantic trades, as well as a decreased reliance on its traditional north-south trades like those serving South America.
Hamburg Süd has indicated an interest in increasing its involvement in the major east-west trades. Indeed, much of the recent “Ocean4” speculation has arisen from the carrier’s signing of expanded cooperative agreements with both CMA CGM and UASC, but Hamburg Süd also already cooperates extensively with G6 Alliance carriers in those lanes. According to BlueWater Reporting, Hamburg Süd currently takes slots on seven Ocean3 loops and four operated by the members of the G6 in the major east-west trades. The carrier shares space on three Ocean3 strings
between Asia and Europe and four in the transpacific, as well as one G6 transpacific service, two G6 transatlantic loops and one standalone transatlantic service operated by Hapag-Lloyd.
In total, Hamburg Süd provides vessels or purchases slots on 55 services across 25 primary trade lanes. Members of the Ocean3 participate on 25 of these loops, while G6 carriers provide vessels or takes slots on 31. There is quite a bit of overlap between the Ocean3 and G6 carriers on these strings as well, since 14 of the 55 total Hamburg Süd offerings include at least one member of both alliances.
The chart below, built with data from BlueWater Reporting’s Trade Route Deployment Report, compares the approximate available weekly deployed capacity of direct services between Asia and South America for Hamburg Süd and the combined capacity of the Ocean3, G6, 2M, CKYHE carriers, with the theoretical “Ocean4” and “G7” alliances. Hamburg Süd’s information includes capacity currently controlled by Compañía Chilena de Navegación Interoceánica S.A. (CCNI), as Hamburg Süd is currently in the process of acquiring the container activities of the Chilean shipping company.
Source: BlueWater Reporting. Between Asia and South America, Ham-burg Süd deploys an estimated 15,699 TEUs on a weekly basis, which represents about 16 percent of the total 100,538 TEUs deployed each week in the trade. The combined weekly capacity of 2M member carriers Maersk Line and Mediterranean Shipping Co. leads the way in the trade with 31,402 TEUs per week, just over 31 percent of the market. With 19,669 TEUs of deployed weekly capacity, the G6 carriers control nearly 20 percent of overall market share, while Ocean3 members deploy a combined 14,113 TEUs per week, equal to about 14 percent of the overall trade. As the chart indicates, however, if Hamburg Süd were to join either the Ocean3 or the G6 Alliance, this picture would change significantly. In that case, the “Ocean4” would immediately vault itself into contention with the 2M and surpass the G6.
Although neither the “Ocean4” nor the “G7” would be as large in terms of scope and market share as the 2M, for example, such an agreement would have to be approved by the relevant regulatory authorities, which could prove difficult given the unique advantages incorporating Hamburg Süd’s north-south connections would bring. The good news for Hamburg Süd is it has put itself in a position to choose which alliance suits it best, or to simply remain independent and continue enjoying the benefits of cooperating with multiple carrier groups.
Meyer is web editor of American Shipper and a research analyst with BlueWater Reporting. He can be reached by email.
This column was published in the June 2015 issue of American Shipper.