Ocean Three Alliance: Slow Steaming Will Save $1 Billion

Saade said competition is growing on Asia-Europe routes

Sharing vessels across the Asia-Europe routes will allow the planned Ocean Three container shipping alliance to slow steam and reduce bunker consumption, cutting operational costs by $1 billion or more annually, CMA CGM Vice Chairman Rodolphe Saade told The Wall Street Journal.

The alliance of CMA CGM, China Shipping Container Lines Co., and United Arab Shipping Co. (UASC), will help push the industry toward the use of larger, more efficient ships, particularly on Asia-Europe routes.

"Asia-Europe is the most competitive loop in our industry and to remain competitive you need large ships," Saade said.

"Today's workhorses that carry 10,000 to 12,000 containers will increasingly redeploy to the Asia-Mediterranean and be replaced by 14,000-container vessels."

Along with the planned 2M alliance of Maersk Line and Mediterranean Shipping Co. (MSC), Ocean Three will make it harder for standalone container shippers to compete on major routes.

"Like in the airline industry, being alone is difficult, so you are better off being in a partnership with the benefits stemming from economies of scale and by sharing the risk," Saade said.

"If someone is to start from scratch, it will be difficult to secure the financing and buy the ships.

"We will see more alliances coming up as this is the trend in the shipping industry."

UASC and CSCL have a combined 11 Triple E now on order, and Saade said CMA CGM has no plans to buy more of the super-sized ships in the near future.

"We are currently covered in terms of vessels," he said.

"In 2015, we will be taking delivery of six 17,000-container ships in addition to the three we already have."

Like 2M, Ocean Three will need to win approval from U.S. regulators before it can start operations.