Tuesday, September 16, 2014
Top Story
Drewry examines Ocean Three alliance
Drewry's latest issue of Container Insight examines how the new "Ocean Three" alliance, the agreement that involves vessel sharing, slot exchange and slot charter deals between CMA CGM, CSCL and UASC.
Ocean Three is subject to regulatory approval but is expected to be sanctioned since current market share is less than 30 percent on all routes
The analysts say this was an expected move after the P3 Alliance of CMA CGM, Maersk and MSC was nixed by Chinese regulators, and Maersk and MSC formed their 10-year "2M" VSA without CMA CGM. The French shipping line had to find new carriers to help fill its big ships.
Ocean Three carriers tout the benefits to customer service and reliability that the new deal would provide. In this regard, the Ocean Three carriers have an edge over the 2M's Maersk and MSC, who have vastly different track records on ship reliability, the report said.
Drewry reports the Ocean Three agreement will cover the key East-West container trades out of Asia to and from North Europe, the Mediterranean and both coasts of North America, starting at the end 2014 or early 2015.
Researchers say little will change in the Asia-North Europe trades for the three lines, other than vessel upgrades so that all four services will have a capacity of 14,000 TEUS on average. On the trans-Pacific routes, the main changes will occur on the Asia-USEC lane, with more focus on the Suez Canal to allow bigger ships.
The Ocean Three will initially operate 15 weekly services, researchers say, using a total of 138 containerships. Discussions are underway to extend the agreement to cover the trans-Atlantic trades, which would mark a new route for CSCL and UASC.
Drewry says most of the East-West routes are completed locked down by the big alliances, and also notes that each container carrier will continue to compete against all other carriers inside and outside of alliances. In Drewry's opinion, it is unlikely the alliances will take on the North-South routes in the near future since the same pressures do not apply in those trades.
The Ocean Three carriers rank second behind the 2M lines in terms of ULCVs, according to Container Insight. Ocean Three's order book for ULCVs is not as big as that of the five members of the CKYHE Alliance, but it's big enough that when all ships are delivered the average size of its big ships will be around 13,200 TEUs, second to 2M's average of 14,800 TEUs.
Drewry concludes that Ocean Three is the final piece in the vessel-sharing puzzle and its success, like all other VSAs, will depend upon not only on unit cost reductions but also on how well the partners can work together.
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