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Integration of transpacific and Asia-Europe routes will start from July 18 and July 25 respectively. China Cosco Container Lines (Coscon) and China Shipping Container Lines (CSCL) will commence further integration of their shipping operations, having completed the fusion of their Southeast Asia services this week. The aim is to switch services under the CSCL brand into Coscon’s in order to optimise operations and improve customer experience. “After the switch, COSCON will issue a unified format of bill of lading, and will also provide a unified and optimised service for the booking, container pick-up/returning, invoicing et cetera,” Coscon said in a notice.
System integration on Africa, South America East Coast services will start from June 15, followed by domestic services from June 27, transpacific services from July 18 and Europe services from July 25. The switch of services on Middle East, South America West Coast Australia, Japan and South Korea, and the rest trades will begin from August 1.Integration plans for foreign trades will kick off from Far East outbound voyages, therefore “the first switch of voyages for most regions will be the return [leg] of specified voyages,” Coscon said.
The company said it has set up a detailed table of switch voyages, and its agents around the world will also provide customer guidelines to ensure that integration is carried out smoothly. China Cosco Holding, the Shanghai-and Hong Kong-listed parent of Coscon, acquired all of CSCL’s containership fleet and network earlier this year, as part of the merger plan between Cosco Group and China Shipping Group
Source: Lloyd’s list
Update: HMM set to join THE Alliance when its business is “normalised”SIX container lines left out of two global alliances have set up a third group as the industry finally settles most of the outstanding uncertainties about who will team up with whom.NYK, Hanjin Shipping, Hapag-Lloyd, K Line, MOL and Yang Ming are forming a new vessel sharing agreement covering the east–west trade lanes. It has been named THE Alliance. Although Hanjin Shipping is included, there is no mention of the other South Korean line, Hyundai Merchant Marine.
The new partnership will build one of the leading networks in the container shipping industry combining approximately 3.5m teu which reaches 18% share of the global container fleet capacity, the six lines said. “All six partners operate advanced and competitive fleets with more than 650 ships in total. This will become the basis of a dedicated fleet deployed into the groups’ future service portfolio. Clients will be able to enjoy an outstanding product characterised by fast transit times, high-frequency sailings and expansive port coverage,” they added in a joint statement. Discussions between Hapag-Lloyd and UASC are progressing according to plan, although an agreement on business combination has not yet been reached.
It is anticipated that UASC will become part of THE Alliance, which will increase the overall alliance capacity to more than 4m teu. “This agreement is a milestone and will enable the six partners of THE Alliance to offer sailing frequencies and direct coverage in the market,” member carriers said. “The unique product will feature enhanced port coverage in Asia, North America, Europe including the Mediterranean as well as Middle East. The network of THE Alliance will ensure frequent sailings, high reliability and very attractive transit times for all shippers in the east-west trade lanes.” The statement from the six lines had been expected, and there had been hints that not all the so-called orphans would be included in this third force.
THE Alliance brings together all three Japanese lines for the first time time. At the moment, both NYK and MOL are in the G6, which will close down next year once the new arrangements are in place. K Line belongs to the CKYHE group which is also being broken up.”The formation of The Alliance is hardly a surprise, as an alliance based on smaller number of carriers would face serious challenges in matching 2M and Ocean Alliance,” said SeaIntel partner Alan Murphy. “An alliance with six members is certainly seen before, and the The Alliance will resemble the G6 alliance in structure, as it will consist of two sets of three carriers coming from two existing alliances, in this case G6 and CKYHE, where G6 was formed of members from the Grand and New World alliances.”
Moreover, he added that while further consolidation across the six to eight potential members of The Alliance would strengthen the alliance against the other alliances. “We may be seeing the contours of a long-term stable market structure, as the two new alliances both have agreements lasting at least five year, and 2M is bound together by a 10-year agreement, while the three now former alliances had much shorter commitments.” This extraordinary merry-go-round started last year when CMA CGM won the bidding for NOL, a deal that should be finalised in the next few months. The French line said at the time that NOL’s liner arm APL would eventually joint it in Ocean Three. But then the decision was taken to dismantle Ocean Three, with CMA CGM and fellow member China Shipping breaking away to form the Ocean Alliance with Evergreen and OOCL. China Shipping had already merged with Cosco.
The next twist in the tale came when the third member of Ocean Three, UASC, revealed it was in merger talks with Hapag-Lloyd. The shake-up left a number of lines effectively on the shelf, and it is those that have now come together, with the exception of HMM, currently a member of the G6 alliance. “I would say it was inevitable after Ocean Alliance that most remaining major carriers would come together,” said Drewy Maritime Equity Research director Raul Kapoor. “Does this address any industry profitability or supply demand balance? Unlikely. The musical chairs seem complete for the time being. HMM is currently discussing its entry into THE Alliance in early June, when it is scheduled to complete its business normalisation, the Korean line said in a statement. “HMM understands that today’s announcement of the establishment of THE Alliance is tentative by its nature, and its member companies are yet to be finalised,” it said.
HMM’s entrance into THE Alliance is only being postponed as there have been several media reports since the beginning of this year about the possibility that HMM might be under court receivership. The current members of THE Alliance is going to determine HMM’s participation once HMM’s business is normalised.” HMM said it would complete its ongoing charter negotiations and debt adjustment via a scheduled bondholders’ meeting. HMM will also execute debt-equity swap for creditors to promptly normalise its business, the shipping line said in its statement. “It is interesting to note that HMM have not been included in the first official announcement of the alliance, as some rumours over the past weeks were expecting them to be included, but it seems they may join the alliance if they manage to sort out their current debt challenges,” Mr Murphy said.
“Being left out would certainly not help with the challenges that HMM is facing, and could create additional concern amongst their potential customers. UASC is not technically “out” of the alliance, as they may be included once the Hapag-Lloyd and UASC merger discussions have reached a conclusion. “So in the end, we may end up with an alliance consisting of all eight carriers “left behind” from the Ocean Alliance shake-up, and it does seem from the outside that an alliance with that many members may find tactical decisions to be a challenge.”
Source: Lloyd’s List
Box line consolidation accelerates as Qatar-controlled carrier aims to take shareholding in Hapag-Lloyd. HAPAG-Lloyd and United Arab Shipping Co are in talks to merge, the two lines announced a day after another major shake-up in the container shipping industry. The German line, which has been at the forefront of consolidation activity, said in a stock exchange notice on Thursday that UASC could become one of its shareholders.
“Hapag-Lloyd and United Arab Shipping Company are currently discussing forms of co-operation, including a potential combination of their mutual container shipping operations,” they said. “In case of a business combination, the parties are basing their discussions on a relative valuation of the two businesses at 72% (HL) and 28% (UASC), subject to a mutually satisfactory completion of the negotiations and the mutual due diligence exercise. “To date, the discussions conducted between the two carriers have not resulted in any binding agreement and no assurance can be given that these discussions will lead to a definitive agreement.”
Both lines had been caught up in other sweeping changes taking place throughout the industry that left the G6 alliance, to which Hapag-Lloyd belongs, weakened. At the same time, Ocean Three member UASC has been left out of the larger Ocean Alliance unveiled on Wednesday by CMA CGM, Cosco, Evergreen and OOCL. Hapag-Lloyd has expanded considerably through mergers and acquisitions. In 2005, it bought CP Ships and then more recently combined with the container shipping arm of CSAV. Having underperformed in recent years, it produced stronger financial results last year, helped by the CSAV contribution, and also completed an initial public offering.
The deal gives Hapag-Lloyd access to 18,000 teu-class ships. UASC was one of the first lines to order this size of ship but as a relative newcomer, it lacks the customer base to fill them without partnerships with other lines. Hapag-Lloyd, on the other hand, is part of the shipping establishment, with strong customer accounts, but the line has held back from ordering ships of 18,000 teu or more for a variety of reasons. Nevertheless, chief executive Rolf Habben Jansen has said the Hamburg line would need a few of these large vessels eventually.
Commenting on the news, SeaIntel’s Alan Murphy said from a network and vessel perspective, “it makes perfect sense”. The perceived weakness with Hapag-Lloyd was its lack of large vessels, which UASC has. For UASC, the deal provides access to deepsea routes and customers that it needs in order to fully utilise its fleet of large ships, said Mr Murphy. “UASC has always said it wanted to expand and this will do it,” he added.
Source: Lloyds List