Drewry: Shipping Alliances Mean Greater Choice, Lower Freight Rates

14 weekly services across 16 carriers ply Shanghai-Rotterdam

Drewry Shipping Consultants (Drewry) says that network dynamics created by new and expanded shipping alliances are likely to continue to push box shipping rates downwards on Asia-Northern Europe routes.

Writing in its weekly Container Insight, Drewry said the 2M alliance of Maersk Line and Mediterranean Shipping Co., and the O3 alliance of CMA CGM, United Shipping Co., and China Container Shipping Line, are both set to increase capacity when large newbuild ships join their fleet, while others will compete on price to keep pace.

It is understood that up to three additional East-West services could result when further ultra-large box ships, currently on order, are delivered to 2M alliance partners.

"[This] will give shippers even more choice and likely suppress freight rates," said Drewry.

Ocean Three is also said to be waiting for larger vessels to bolster the capacity of its combined fleet, and is expected to overtake the G6 alliance in terms of capacity when those vessels are delivered.

G6 will then be in the weakest position of the three major alliances in terms of both capacity and port coverage.

"The G6 is definitely the alliance to watch," said Drewry.

"They have the weakest port coverage and transit times, while their shortfall of big ships will see them lose market share and lose ground on slot costs.

"Being in such an obviously weaker position risks them having to become price-takers in order to fill their assets."

In November the U.S. Federal Maritime Commission's (FMC) Richard Lidinsky said that the container shipping industry needs a "global regulatory approach" given the size of new shipping alliances.