Jul 11, 2014

Maersk Line, MSC form 2M in East-West route

Maersk Line and the Mediterranean Shipping Co. (MSC) announced on July 10 that they have entered into a 10-year Vessel Sharing Agreement (VSA) in the East-West trunk routes. To go under the name 2M, the new system will have an operational fleet of about 2.1 million TEUs over a total of 21 services loops in the Asia-North America and Asia-Europe/Atlantic trade routes. While this partnership will serve as the alternative plan to the P3 Network that was aborted after it was not allowed by the Chinese authorities, it will have a smaller scale because CMA-CGM will not be joining the group. Further, the joint operation center that was due to be established under the P3 will not be set up anymore as their partnership will just basically cover space exchange. The new alliance is expected to commence in the first half of next year.

With the debut of 2M, Maersk Line and MSC will replace all their existing space exchange agreements in the East-West trade with new services. Under the new 2M system, there will be a total of 21 service loops, comprising six loops in the Asia-Europe trade, four loops in the Asia-Mediterranean lane, four loops in Asia-North America West Coast segment, two loops in the Asia-North America East Coast trade, three loops in the North America-Europe leg and two loops in the North America-Mediterranean route. Maersk Line will deploy about 110 ships aggregating 1.2 million TEUs, equivalent to 55% of the total fleet of 2M. Meanwhile, MSC will deploy around 75 ships of 900,000 TEUs.

With 2M, Maersk Line and MSC are taking into consideration the size of the market share and the extent of their partnership scope, which were seen as the reasons behind the disapproval of the P3 Network. With the partnership of just two companies, their market share will be controlled. Also, they will not put up a joint operation center that has independent authority in relation to the creation of a service network. Their team-up will be limited to the framework of large-scale slot exchanges, indicating that they hope to gain the approval of the authorities at each country. The MSC and CMA-CGM had been bound by a VSA in the Europe/Mediterranean trade route up until the time before the establishment of the P3 Network was announced and it seems that the above partnership further expanded this kind of tie-up.

The two partners will not be limited to marine transport services, as they will also independently carry out businesses in other related fields. Specifically, they intend to independently handle the planning of cargo stowage and operation of ships, as well as course/voyage planning. Similar to P3, they will also execute such functions as pricing, marketing and customer services on their own.

By correcting in advance the points that were considered problematic in P3, the duo is seen to intend on continuously groping for other avenues of partnership. With regard to the new system, the attention of the concerned sectors in the industry will now be focused on how the Chinese authorities will decide on the formation of 2M.

The actions of the remaining CMA-CGM will also gain wide attention. A large number of other operators have already taken part in some alliances, so it is unable to find another operator that is easy to partner with in terms of scale and network. China Shipping Container Lines, which had previously tied up with it in some services, has already partnered with the United Arab Shipping Co. (UASC), while Israeli operator Zim Integrated Shipping Services has withdrawn from the Europe trade route.

Search for Top 5 Countries, Suppliers & Importers for each HS Codes you can select Free on Datamyne Site.

Descartes Datamyne