CMA CGM, CSCL, UASC Announce Alliance

Two big alliances could dominate Asia-Europe container shipping

France's CMA CGM SA (CMA CGM) announced a new alliance with China Shipping Container Lines Co. (CSCL) and United Arab Shipping Co. (UASC) Tuesday, the Wall Street Journal reports.

The alliance, Ocean Three, is expected to involve 150 ships moving about 20 percent of all Asia-Europe cargo, 13 percent of volume on Trans-Pacific routes, and 7 percent of cargo going across the Atlantic.

CSCL said the agreement will operate for two years and then be automatically extended if none of the parties raise objections.

The deal comes as Maersk Line and Mediterranean Shipping Co. (MSC) are preparing to launch their own alliance, known as 2M.

"Ocean Three is an antidote to 2M," said Jonathan Roach, a container analyst with London-based Braemar ACM Shipbroking.

"It's in line with staying competitive with the 2M and it's a good deal, because they have invested in some of the biggest ships in the business and also brought a Chinese company into the fold."

Like 2M, Ocean Three needs approval from the U.S. Federal Maritime Commission (FMC) before it can move forward, although it has not yet filed with the commission.

Observers expect the alliances to push smaller operators out of the Asia-Europe route, stabilising freight rates by driving down supply.

Maersk Line CEO Søren Skou said recently that the 2M alliance is operationally ready to launch and will not require approval from Chinese regulators, after a member of the FMC said he would reach out to the commission's Chinese counterparts before signing off on the plan.