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Shipping alliances restructure services to absorb mega ship influx in 2018

THE flood of tonnage entering the market has prompted container shipping alliances to restructure or change their service networks in 2018.

Most of that extra capacity is to be delivered to the Ocean Alliance, with SeaIntel saying that the alliance's fleet of mega ships will expand by 60 per cent early on in 2018.

According to the analyst, a total of 108 mega ships will be delivered in 2018, doubling the number currently in operation, reported IHS Media. There are 78 mega ships with a capacity of 10,000 TEU or above for a total of 1.2 million TEU scheduled for delivery next year, according to IHS Markit.

Of the three alliances - THE Alliance, 2M (Maersk, MSC plus HMM) and Ocean Alliance (Cosco Shipping, CMA CGM, OOCL and Evergreen) - 2M and THE Alliance have a development plan for the phase-in of new deliveries in 2018 that aims to augment existing services and reduce unit costs on those services by deploying a few more ultra-large ships.

The same cannot be said for the Ocean Alliance, and the concern for shippers is that shipping lines will need to revise the structure of their existing network to optimise the deployment of the fleet portfolio.

"Major restructuring of networks is typically seen to take place in the first quarter and early [second quarter] in the wake of Chinese New Year. This timing coincides well with the delivery profile for 2018," SeaIntel said.

"Consequently, shippers should prepare themselves for a 2018 wherein the network structures of 2M and THE Alliance are likely to undergo only smaller modifications, but wherein we will see an Ocean Alliance potentially change the network more drastically, offering new products and network structures, driven by the rapid delivery of large vessels."

In addition to the network restructuring, the Ocean Alliance will also have to deal with the Cosco Shipping-OOCL takeover. That acquisition is expected to be finalised over the next few months, and although the plan is for OOCL to continue operating under its own brand, there might be some additional service changes on the horizon.

Apparently unruffled by the merger of its three Japanese members, THE Alliance has unveiled its new service offering from April 2018 when the Ocean Network Express (ONE) begins operations. Hapag-Lloyd, ONE, and Yang Ming will offer 33 services covering all the east-west trade lanes and connecting 81 ports, the alliance members said in a statement.

Commenting on the success of its cooperation since launching in April 2017, THE Alliance member carriers said: "After one year of cooperation we are proud to say that our services and the network improved significantly."

The three carriers are planning to deploy a fleet of 250 ships in the Asia-Europe, North Atlantic, trans-Pacific trade lanes, as well as in services to the Middle East and the Arabian Gulf-Red Sea.

The new offering will feature eight services in the Asia-Europe trade including three services covering the Mediterranean market, while 16 joint services will be operated by THE Alliance members on the trans-Pacific trade. Seven loops will serve the North Atlantic trade covering North European and Mediterranean ports as well as those in the US, Canada and Mexico, and two in the Middle East.