Liner eyes on the Americas

   Several months ago, this column said the recently formed 2M and Ocean3 vessel sharing agreements (VSA) of Maersk Line and Mediterranean Shipping Co., and CMA CGM, United Arab Shipping Co. and China Shipping Container Lines, respectively, appeared to be on a collision course in the major east-west trades (November 2014, “Lead-up to east-west trade showdown,” page 30). Now, with liner operations for both VSAs in full swing, north-south trades, specifically the intra-America routes, could be the next battleground.
   In January, Maersk commenced its newest intra-regional liner operation, SeaLand. Based just outside Miami, SeaLand joins Maersk’s portfolio of specialist brands that includes intra-European line Seago, Safmarine in Africa, and dedicated intra-Asia carrier MCC. SeaLand will similarly serve the intra-America trades exclusively under its own brand, separate from the parent Maersk Line. (The SeaLand name, as most people who follow the container industry know, is not new. The company was created by Malcom P. McLean out of Pan-Atlantic Steamship Co. in 1960 and acquired by Maersk from the railroad CSX in 1999.)
   SeaLand’s Chief Executive Officer Craig Mygatt told American Shipper the intra-America trade presents significant opportunities and unique cultural and operational challenges. “Fifty percent of the volumes are from small to medium-size shippers, so it’s a huge change coming from the customer base that Maersk Line provides,” Mygatt said. “We have to be consistent and pay attention to every single customer.”
   Not to be left out, members of the Ocean3 VSA have recently ramped up their own interests in the Americas. CMA CGM plans to cooperate extensively with Hamburg Süd, an important north-south carrier which was rumored to be in merger talks with fellow German line Hapag-Lloyd just last year. Rodolphe Saadé, CMA CGM’s vice chairman, called the deal “a major new agreement” that would bolster the carrier’s position in both North and South America.
   UASC formed a slot-sharing agreement with Hamburg Süd in September 2014 that gives it greater access to trade lanes between Europe, Asia and South America’s east coast from mid-2015. More recently, UASC ordered 2,000 additional refrigerated boxes for use in the South American trades and expanded its partnership with liner shipping agency Ultramar Group in Brazil, Argentina and Uruguay.
   The adjacent chart, built with data from BlueWater Reporting’s Capacity Report, compares the approximate available weekly deployed capacity of direct region-to-region services strictly within the Americas for expected SeaLand offerings to the combined capacity of the members of the 2M VSA; the Ocean3 VSA lines, along with new cooperative partner Hamburg Süd; G6 Alliance carriers, including CSAV, which recently merged its liner operations with G6 member Hapag-Lloyd; and CKYHE Alliance lines. SeaLand’s capacity is referred to as “expected,” because no official service presentation or schedules were available at the time of publication.

   With 37,483 TEUs of deployed weekly capacity available, SeaLand will already have access to a considerable amount of the intra-America market share, and adding MSC’s regional offerings boosts that number to 58,049 TEUs per week. By comparison, G6 Alliance members deploy an estimated 55,092 weekly TEUs, the Ocean3 lines, along with Hamburg Süd, combine for 48,470 TEUs per week, and the combined capacity of CKYHE Alliance carriers is only 13,317 TEUs.
   Because the figures represent capacity for all services on which each carrier participates, not just those on which it provides vessels, there is some overlap between carrier groups. The 2M carriers, for example, share a total of 10 services with members of one or more other alliance or VSA – six with members of the G6 Alliance, two with either Ocean3 VSA lines or Hamburg Süd, one with Evergreen of the CKYHE Alliance, and another with G6 carriers and Hamburg Süd. In addition, Ocean3 carriers and Hamburg Süd together share six services with G6 and another two with at least one member from the G6 and CKYHE alliances.
   The intra-America trades may never have the clout or fierce competition of the Asia-Europe or transpacific trades, but they could bring lines one step closer to having true global service networks. As in the east-west trades, cooperative agreements will likely be crucial to profitability and we may even see more carrier consolidation. Will carriers fall into the same groups or forge new strategic alliances?
   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 March 2015 issue of American Shipper.