UNITED ALLIANCE AND COSCO/”K” LINE/YANGMING GROUP TO MERGE
UNITED ALLIANCE AND COSCO/”K” LINE/YANGMING GROUP TO MERGE
The United Alliance of Hanjin Shipping and its subsidiary Senator Lines will combine forces with the alliance between COSCO Container Lines, “K” Line and Yangming Marine to form a larger, yet-to-be-named global alliance.
In a joint statement, the five carriers said that their respective managements met in Shanghai on Sept. 20 and agreed on a future cooperation between them, with the ultimate goal of establishing an alliance based on their worldwide networks.
A spokesman for Hanjin Shipping in Seoul said that the combined alliance of the five carriers will have more than 300 vessels, and will be among the largest in the container shipping industry.
The temporary name for the larger alliance, “CKYH,” incorporates the initials of COSCO, “K” Line, Yangming and Hanjin.
The five carriers said in a statement that “it was jointly agreed among the lines that cooperation among the lines in the industry was irreversible.”
“The only way to provide best service to their customers in the container shipping industry is to strengthen the cooperation tie among the lines by means of optimization of each carriers’ assets, rationalization of their services on a global basis,” they said.
“We believe our alliance will have the largest capacity,” said S.H. Kwon, spokesman for Hanjin.
United Arab Shipping Co., a former member of the United Alliance, will not join the new alliance.
Hanjin said that it may continue to cooperate with UASC, even if it is outside the new five-carrier alliance.
However, the impact of the change of alliances on UASC could be negative.
There will be a transition period when the United Alliance and the COSCO/”K” Line/Yangming group will exchange slots and study changes in port rotations. However, the timetable for the implementation of the new alliance is unknown. The carriers will have to notify their agreement to the U.S. Federal Maritime Commission and the European Commission, which will examine whether they are potentially anti-competitive.
The combined group will operate:
* 11 weekly services in the Asia/U.S. West Coast trade;
* 3 weekly services in the Asia/U.S. East Coast trade;
* 6 weekly services in the Asia/northern Europe trade;
* 2 weekly services in the Asia/Mediterranean trade;
* and 5 weekly services in the transatlantic trade, including the Mediterranean.
“It’s a new alliance,” said an executive at “K” Line. “It’s an extension of the existing cooperation among “K” Line, COSCO and Yangming.”
The five carriers of the new group said that they have decided “to study any feasible measure and accelerate the process of cooperation” to implement the alliance.
The announcement of the combined alliance comes as ocean carriers are facing over-capacity, cost pressures and declining freight rates. The United Alliance lost one of its members earlier this year, when Cho Yang faced financial difficulties and left the group.
Besides the United Alliance and the COSCO/”K” Line/Yangming alliance, the other major global alliances today are the Grand Alliance of Hapag-Lloyd, Malaysia International Shipping Corp., NYK, OOCL and P&O Nedlloyd and the New World Alliance of APL, Hyundai Merchant Marine and MOL. The former alliance between Maersk Line and Sea-Land Service was dissolved in 1999 when Maersk acquired its former alliance partner.