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Shipping/Maritime

CMA CGM, COSCO, Evergreen and OOCL Extend Alliance to 2032

 

Demonstrating their commitment to cooperation and putting to rest some of the ongoing speculation, the CEOs of four of the largest container carriers came together to announce they agreed to extend for at least five years their cooperation known as OCEAN Alliance. As the landscape is set to change as other carriers are set to realign, these operating agreements however have also come under increasing scrutiny by regulators and criticized by shippers.

Launched in the spring of 2017, OCEAN Alliance reports it is the world’s largest operational shipping network calling itself “the backbone of trade routes for international commerce.” They highlight the advantages of coordinating schedules and sharing capacity to provide best-in-class service, fast transit times, competitive sailing frequencies, and extensive port coverage.

The chief executive officers of the CMA CGM Group, COSCO SHIPPING, Evergreen, and OOCL today signed a Memorandum of Understanding in Shanghai to extend the OCEAN Alliance operational cooperation for five additional years. They are highlighting that it will continue to operate until at least 2032.

“For seven consecutive years, OCEAN Alliance has been contributing to a stable supply chain, in compliance with all applicable laws and regulations. With this extension, it will pursue its primary goal: deliver the best service offering to its partners’ respective customers in the years to come,” the group said in its announcement.

“The decision to extend our cooperation for at least five more years forges our commitment to meet our customers’ needs and build even more secure, reliable, and sustainable supply chains,” said Rodolphe Saadé, Chairman and CEO of the CMA CGM Group.

The uncertainties came after Hapag-Lloyd announced it would be leaving a competing cooperation known as The Alliance to join with Maersk in a new cooperation called Gemini. This was the second step in an industry shakeup after Maersk and MSC Mediterranean Shipping Company announced last year they would be ending their alliance known as 3M. Without its largest partner, there had been speculation of a further shuffling of partners as THE Alliance looks to strengthen its cooperation after the loss of Hapag.

The three alliance networks came under scrutiny during the pandemic when critics highlighted the consolidation in the shipping industry. They contended that the three groups controlled more than 80 percent of the global shipping industry. There have been frequent accusations of collusion and price fixing as well as the general comment that the three groups have established a stranglehold on shipping.

In the U.S. the criticisms were a key contributor to the passage of the Ocean Shipping Reform Act of 2022. Both the European Union and UK regulators have also announced that they are discontinuing allowances made to the shipping industry meaning going forward the lines and the three alliances will be subject to more stringent antitrust regulations to ensure competition. Regulators noted that the change would not eliminate the cooperation but was meant to reduce the power and ensure fair competition so as not to disadvantage shippers.
 

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