CMA CGM and China COSCO Look to Solidify New Mega-Alliance

A CMA CGM and China COSCO led mega-alliance has potential to split up three of the four current main East-West shipping alliances.

Alphaliner, in its latest weekly report, says that CMA CGM S.A. (CMA CGM) and China Ocean Shipping (Group) Company (China COSCO) are working toward the creation of a new mega-alliance that could split up three of the four current major East-West shipping alliances and provide significant competition to the fourth.

CMA CGM and China COSCO are noted to be looking to involve Evergreen Line (Evergreen) and Orient Overseas Container Line (OOCL) in the alliance, significantly altering the current shipping landscape and leaving the eight remaining carriers of the Ocean Three, CKYHE, and G6 with gaps in their alliances.

While discussions are said to be ongoing among potential mega-alliance members, with the possibility for potential members to change, the impetus for the so-called "CCEO" group has been called "clear" by Alphaliner.

"The motivation is to from a strong and stable alliance that could challenge the 2M's dominance in the East - West trades and to distance the 'CCEO' from some of the weaker partners within the current alliances, which could be facing financial distress," said Alphaliner.

The carriers have not announced their plans publicly, but more details could come after China COSCO finalises the transfer of China Shipping Container Lines Co., Ltd.'s (CSCL's) containership fleet on or before March 1, says Alphaliner.

CMA CGM is reported to have previously stated that it will pull APL from the G6 alliance after it completes its takeover of APL's principal, Singapore-based Neptune Orient Lines Limited (NOL), later this year.

In August, Drewry Shipping Consultants Limited (Drewry) speculated on the impact that a merger between China COSCO and CSCL may have on carrier alliances and future carrier mergers in Asia, warning that the amalgamation could prove potentially damaging to industry competition.

Also in August, Maersk Line said that seven months into its newly adjusted 2M alliance with the Mediterranean Shipping Company S.A. (MSC), it expected to be successful in reaching the $350 million savings it had projected.