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Standalone box carriers look to consolidation in mega-alliance market

STANDALONE carriers, such as Evergreen, United Arab Shipping Co and China Shipping, might well consider forming alliances to compete with the P3, CKYH and G6 networks that account for 80 per cent of the capacity on the Asia-Med route.

This is one interpretation of Lloyd's List Intelligence data based on a successful outcome of regulatory review of the P3 (CMA CGM, MSC and Maersk) and G6 (NYK, Hapag-Lloyd and OOCL, APL, Hyundai and MOL) alliance that will reshape shipping in years to come.

CKYH (Cosco, "K" Line, Yang Ming and Hanjin) and G6 make up 30 per cent of capacity on the Asia-Med trade while the P3 accounts for 52 per cent.

Korea's Hanjin has considered inviting Evergreen into CKYH as standalone carriers look to tie-ups in the face of mega alliances that confront them. Evergreen and CKYH share four services on the Asia-Med run.

If CKYH joined two Asia-Med Evergreen services, the alliance could offer an additional 56,000 TEU, says Lloyd's List. Hanjin already has a deal with Evergreen the two services while Cosco, "K" Line and Yang Ming have deals on one.

The ever-independent Evergreen may not find the option attractive, though there is little doubt the others want to strengthen their hand in the face of mega alliances if only to preserve market share.

According to P3 plans, each of its members will offer nine services on the Asia-Mediterranean trade route.

P3 would offer 18 services on this route MSC (six), Maersk (five) CMA CGM (seven), of which seven are shared between two of the network carriers, altogether offering 112,403 TEU.

Container Trades Statistics show monthly volumes from Asia-West Med was 10 per cent higher year on year in the second half of 2013 though dropping in August. Asia-East Med/Black Sea volumes fell from a July high, but still made a 15 per cent year-on-year jump in the second half.

G6 offers three services on the route with 20,500 TEU with an average vessel size of 6,800 TEU while CKYH offers an average size of 8,500 TEU. P3 offers an average vessel size of 10,200 TEU.

Overcapacity, brought on by bigger ships, will be addressed through consolidation, says Lloyd's List, adding that "there is no doubt that major change is coming so that carriers can remain competitive in this tight margin industry".