Customers to be winners in new OOCL alliance

PUBLISHED : Wednesday, 03 December, 1997, 12:00am
UPDATED : Wednesday, 03 December, 1997, 12:00am

Customers of Orient Overseas Container Line (OOCL) can expect to benefit from the new alliance it has formed with four other shipping companies.

OOCL spokesman Stanley Shen said the line's decision had been driven by commitment to give its customers the best service.

'What we have seen is a round of musical chairs over the past year, with P&O merging with Nedlloyd and NOL buying APL,' Mr Shen said.

'Now the music has stopped, we believe we are in the best position to serve our customers.

'This will create an exceptionally strong product to meet our customers' needs both for the present and the future, as well as generate further efficiencies.' The link between OOCL, Malaysia International Shipping Corp (MISC), P&O Nedlloyd, Hapag-Lloyd and Nippon Yusen KK was announced on Monday.

Previously OOCL and MISC were members of the Global Alliance, while the other three firms belonged to the Grand Alliance.

OOCL spokesman Elin Wong said the new group was still unnamed. Continuing with the Grand Alliance title was 'one of the options', she said.

The new grouping, the world's biggest co-operative shipping venture, will operate more than 100 deep-sea container vessels.

Under the deal, Asia-Europe services will comprise six loops each employing eight vessels and including a fast, direct service to the mainland, Taiwan, South Korea and Japan.

There will be five weekly sailings to northern Europe and one weekly sailing to the Mediterranean. The Asia-North American service will consist of seven loops - one via the Suez Canal, one via the Panama Canal and five West Coast services.

The shipping lines hope the new stability will allow them to carry out cost-cutting plans to counteract freight rates which fell by up to 10 per cent in the third quarter.

With the booming container shipping market still curbed by cut-throat competition, few expect the industry to remain static for long, with further mergers widely predicted.

Rival lines said the move marked a key shift by OOCL, since previously it had developed close operating linkages with the American President Line (APL), which was taken over acquired by Singapore's Neptune Orient Lines for US$825 million.

Mr Shen said the relationship with APL would be unwound since it had been superseded by the new alliance.

A spokesman for P&O Nedlloyd said the enlarged alliance would be positive since each of the lines complemented the others, with strengths in particular markets.

Analysts said the finalisation of changes to membership of the rival alliances should end recent market uncertainties, and help the lines push through cost-cutting measures.

'Cost-savings have certainly been held up by all this recent manoeuvring,' commented one London shipping analyst.

'With these changes now confirmed, everyone knows the score, and they will be able to get on with their plans. The acid test will be if rates and results improve.'