China Cosco Shipping unit forms alliance with three container giants on Asia lanes
China Cosco Shipping Corp, the newly created entity following the merger of China Ocean Shipping (Group) and China Shipping Group in January, has formed an alliance with three of the world’s leading container operators to grab a share of the trade on the shipping lanes connecting Asia.
Cosco Container Lines, a unit of China Cosco Shipping that became the world’s fourth-largest container shipping line after the merger, had signed a memorandum of understanding to form a partnership with France’s CMA CGM, Hong Kong-based Orient Overseas Container Line and Taiwan’s Evergreen Line in Shanghai, the carrier said in a statement on Wednesday.
The merger between China Ocean Shipping and China Shipping came as part of the mainland’s restructuring of its state-owned enterprises.
The Ocean Alliance, which is due to begin operations in April next year with an initial period of five years, would allow the members to serve the sea lanes covering Asia, the statement said.
The new alliance had yet to obtain regulatory approvals, it added.
Daniel Meng, an analyst at CLSA, said the alliance would be the second-largest in the world after 2M, the vessel-sharing partnership between Maersk Line and Mediterranean Shipping Co.
Member carriers said: “Shippers will have an attractive selection of frequent departures and direct calls to meet their supply-chain needs, including access to a vast network with the largest number of sailings and port rotations connecting markets in Asia, Europe and the United States.”
The alliance would involve a fleet of 350 container ships and the deployment plans would initially cover more than 40 services globally mostly connected with Asia, including about 20 services each in the US and Europe-related trades, the statement said.
China Shipping Container Lines, the container unit of China Shipping, CMA CGM and United Arab Shipping currently belong to the Ocean Three alliance, while China Ocean Shipping is part of the CKYHE Alliance, which is made up of five Asian operators including Evergreen.
“The current alliances will expire this year and it is widely believed that China Shipping and [China Ocean Shipping] will exit from these alliances,” Meng said.
Meng said that going forward, competition would not just exist among alliances, but also among members within the same alliance as joining an alliance could only help them save costs and they still needed to compete for clients.
CMA CGM currently is the world’s third-largest container operator by capacity while Evergreen is ranked fifth and OOCL ninth, according to data provider Alphaliner.