New Container Carrier Alliance, THE Alliance, Announced

Friday May 13, 2016

In a much expected move, six carriers today announced they have combined to form a new container carrier alliance, known as "THE Alliance."

The initial members are Mitsui O.S.K. Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK), Kawasaki Kisen Kaisha Ltd. (K Line), Hanjin Shipping Co. (Hanjin), Hapag-Lloyd AG (Hapag-Lloyd), and Yang Ming Marine Transport Corp. (Yang Ming), with more expected to join at a later date.

"The new partnership will build one of the leading networks in the container shipping industry combining approximately 3.5 million TEU or 18 percent share of the global container fleet capacity," said MOL, adding that the companies operate a total of more than 620 ships.

The new group's control of 18 percent of the world's container capacity, will be competing against 2M's 27.9 percent share and Ocean Alliance's 23.3 percent, according to consolidated data from Alphaliner.

Ship & Bunker reported last week that Alphaliner had suggested that as many as nine box carriers could combine to form the new alliance, following a shake up of existing alliances.

Troubled Korean carrier Hyundai Merchant Marine (HMM), along with United Arab Shipping Company (UASC) and Hamburg Sϋd are the three players not included in today's announcement.

However today's announcement did note that Hapag-Lloyd is still be in talks with UASC - which as Ship & Bunker previously reported includes a possible merger of operations - and it was said that UASC is expected become part of THE Alliance.

In a separate statement today, HMM says it also has plans to join THE Alliance.

"HMM was not included in today's announcement regarding The Alliance as its participation is only being postponed, caused by several media reports about the possibility that HMM might be under court receivership," it said.

"It is understood that the current members of The Alliance is going to determine HMM's participation once financial structure of the company is enhanced upon the completion of its business reconstruction plan."

Pending approval of relevant regulatory authorities, THE Alliance will commence operation in April 2017 with an initial term of five years.

"This agreement is a milestone and will enable the six partners of THE Alliance to offer sailing frequencies and direct coverage in the market," said the carriers in a joint statement.

"The unique product will feature enhanced port coverage in Asia, North America, Europe including the Mediterranean as well as Middle East. The network of THE Alliance will ensure frequent sailings, high reliability and very attractive transit times for all shippers in the East-West trade lanes."

Today's announcement follows on from last month's announcement of the "Ocean Alliance" consisting of CMA CGM S.A. (CMA CGM), COSCO Container Lines (COSCO), Evergreen Line (Evergreen) and Orient Overseas Container Line (OOCL).