Maersk, Hapag-Lloyd Stress Reliability Upon Forming New Shipping Alliance
As its 2M alliance with Mediterranean Shipping Company (MSC) is set to dissolve in January 2025, Maersk announced Wednesday it would enter a new vessel-sharing agreement with fellow container shipping line Hapag-Lloyd.
The collaboration, known as the Gemini Cooperation, will commence in February 2025. As part of the new deal, Hapag-Lloyd will leave THE Alliance, which includes container lines HMM, Ocean Network Express (ONE) and Yang Ming, in January 2025.
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Alliances like 2M and THE Alliance are designed to expand shipping lines’ global service and capacity levels and enable more containers to be moved at a time, all while cutting costs through sharing port terminals and inland logistics networks.
Container shipping expert John McCown called it an “interesting development,” noting that Maersk and Hapag-Lloyd seem to be a bit more aligned with their views than Maersk and MSC.
“While Hapag-Lloyd has a focus on operations and efficiency, they don’t seem to see growth and scale economies as the main path to that,” said McCown. “In that sense, MSC’s growth objectives looked out of step with Maersk, which was presumably a key reason the 2M alliance ended. In deciding to do this with a company that is more of a kindred spirit, Maersk is saying they see benefits to an alliance compared to a go-it-alone approach. MSC’s growth plans have them comfortable with the go-it-alone approach.”
McCown noted that if Maersk was going to continue with an alliance approach after 2M, Hapag-Lloyd would be “the most logical choice.”
The container shipping giants are positioning the collaboration’s selling point around reliability. Maersk and Hapag-Lloyd set a target to deliver schedule reliability rates of above 90 percent once the network is fully phased in—a lofty goal considering these rates were just 61.9 percent in November 2023, according to data from Sea-Intelligence.
This would give shippers incentive to choose the services of either company amid concerns of increased blank sailings as more new ships come online later in 2024.
“If a 90 percent schedule reliability can be achieved, this should allow this team-up to be especially competitive for competing for containerized freight that has a high monetary density (think high dollar value of product per container),” said Jason Miller, interim chairperson, department of supply chain management at Michigan State University. “Schedule reliability is more valuable to beneficial cargo owners (BCOs) whose cargo has higher monetary density due to safety stock implications.”
Schedule reliability is even more relevant today, as both ocean carriers have suspended transit through the Red Sea since December amid repeated Houthi missile attacks, forcing the firms to divert vessels around southern Africa. Such diversions add lead times as high as two weeks in many cases.
Maersk and Hapag-Lloyd say they can improve reliability by initiating service loops with fewer port calls, and by simplifying vessel operator structures so that one of either Maersk or Hapag-Lloyd is the sole operator on most mainliner services.
While McCown was not surprised of the deal, Miller told Sourcing Journal that he wasn’t expecting to see a new vessel-sharing agreement like this announced on the heels of the 2M dissolution.
“The biggest question it makes me ask is whether Hapag-Lloyd is thinking of pivoting its strategy in a similar direction to Maersk in focusing on more end-to-end services,” Miller said.
Over the past few years, Maersk has sought to expand beyond its core ocean freight expertise to focus on container logistics across transport nodes, acquiring firms like Li & Fung’s logistics business LF Logistics and air freight forwarder Senator International, among others.
Vincent Clerc, CEO of Maersk, emphasized that a flexible ocean network would bolster reliability, calling Hapag Lloyd the “ideal ocean partner” for the collaboration. Rolf Habben Jansen, CEO of Hapag-Lloyd, also said in a statement that the partnership will enable the shipping lines to further accelerate industry decarbonization efforts.
The new cooperation would be a team-up of the second and fifth largest container shipping firms in the world by freight hauled, according to maritime consultancy Clarkson Research, and will comprise a fleet pool of roughly 290 vessels with a combined capacity of 3.4 million containers.
Additionally, the cooperation will comprise a fleet pool of around 290 vessels with a combined capacity of 3.4 million 20-foot equivalent container units (TEUs); Maersk will deploy 60 percent and Hapag-Lloyd 40 percent. Maersk’s total fleet is comprised of 677 vessels, according to Alphaliner data, while Hapag-Lloyd owns 269 ships.
Gemini will cover seven trade lanes: Asia to the U.S. West Coast; Asia to the U.S. East Coast; Asia to the Middle East; Asia to the Mediterranean; Asia to the North Europe; Middle East to India/Europe and trans-Atlantic.
In total, Gemini will comprise 26 mainline ocean services across the trade lanes, which will be complemented by dedicated land shuttle services. Under the partnership, 14 shuttle services in Europe, 13 in Asia, four in the Middle East and one in the Gulf of Mexico, will help transport containers between transshipment hubs and ports.
Maersk and Hapag-Lloyd will plan the transition from their current alliances to the new operational cooperation throughout 2024. The ocean carriers said service to customers will continue along the existing agreements.
The end of the 2M alliance and Hapag-Lloyd’s exit from THE Alliance leaves ONE, HMM and Yang Ming stranded. That network now takes up 11.6 percent of total market share in global container shipping, according to Alphaliner. That share is dwarfed by Gemini (21.5 percent market share), MSC (19.8 percent) and the Ocean Alliance, which consists of CMA CGM, Cosco and Evergreen (29.3 percent).
“The pressure is then on these three carriers to either lure a new partner out from Ocean Alliance or reinvent a new service concept,” said Lars Jensen, CEO of container shipping consultancy Vespucci Maritime, in a LinkedIn post.
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