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Hapag-Lloyd AG, Germany's top container shipping line, will join five Asian carriers to
create a new vessel-sharing alliance to help combat a chronic glut in capacity that has kept freight rates low.
Called simply "The Alliance," other partners will include Japan's Kawasaki Kisen Kaisha, Mitsui OSK Lines, Nippon Yusen KK, South Korea's Hanjin Shipping and Taiwan's Yang Ming Marine, according to a Hapag-Lloyd statement. The new partnership will control 18 percent of the world's container shipping fleet with more than 620 vessels and a combined capacity of 3.5 million TEUs, the statement said.
Merger talks between Hapag-Lloyd and United Arab Shipping are in the works, and "it is anticipated" that UASC will become part of the new alliance, which would help increase the total capacity of The Alliance to more than 4 million TEUs. Hapag-Lloyd said it hopes to sign a deal by mid-June, a person familiar with the matter said Thursday.
The Alliance agreed to a five-year term scheduled to start operations in April 2017 after regulatory approvals.
Nippon Yusen, Mitsui OSK and Hapag-Lloyd are all currently part of the G6 Alliance, which will cease to exist next year, while Hanjin Shipping, Kawasaki Kisen and Yang Ming belong to the CKHYE alliance that also includes Cosco Container Lines Co. and Evergreen Marine Corp Taiwan.
Hyundai Merchant Marine Co., now part of the G6
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Alliance, said in a separate statement Friday that once its business is normalized, it plans to complete the necessary processes to join The Alliance before September.
Global shipping lines are regrouping to compete more effectively against market leaders Maersk Line and Mediterranean Shipping Co. which are allied under the 2M partnership, controlling 28 percent of the market, according to Alphaliner. They also have to contend with Chinese operators as the government consolidated operations of two major state-controlled groups, China Ocean Shipping Group and China Shipping Group.
France-based CMA CGM is taking over Singapore's Neptune Orient Lines Ltd. and plans to bring the latter's container operations unit APL under the Ocean Alliance. That will mean the partnership could have 26 percent of the market, according to figures from Alphaliner.
For more of the Bloomberg story: www.bloomberg.com
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