New analysis shows tug of war between alliances for market share in major east-west trades
As competition authorities and shipping agencies allege collusion between carriers in the current environment of record-breaking and extremely high freight rates, new analysis from Sea-Intelligence shows fierce competition for market share between the three global east-west alliances.
Since the start of 2020, 2M, the Maersk consortium, MSC, has lost capacity market shares to the benefit of the Ocean Asia-Northern Europe Alliance and both the Ocean Alliance and the Asia-Mediterranean Alliance.
The Ocean Alliance is made up of CMA CGM, Cosco and Evergreen while THE Alliance includes Hapag-Lloyd, HMM, Ocean Network Express (ONE) and Yang Ming.
The biggest shifts in market share have taken place in recent times on the transpacific. All three carrier alliances have lost market share of capacity to non-alliance services with a slew of new names entering the red trade lane, deploying whatever size tonnage they can muster.
The capacity market share of non-alliance services on the trans-Pacific is now greater than that of THE Alliance and 2M
Remarkably, the market share of non-alliance services capacity is now greater than that of THE Alliance and 2M, and now equals around 30% of all capacity deployed trans-Pacific, according to data from Sea-Intelligence.
âContrary to complaints about an understanding of the market between carrier alliances, our analysis shows that carrier alliances are indeed fighting for capacity market shares on trans-Pacific and Asia-Europe trade. This is even evident during the turbulent year-and-a-half pandemic, âSea-Intelligence said in its most weekly report.
Regardless of this new analysis, many are deeply frustrated with the state of liner shipping and the power of the Three Alliances.
Earlier this month, an American furniture shipper filed a lawsuit for $ 600,000 with the Federal Maritime Commission (FMC) against a few global container carriers, which it claims have repeatedly violated the terms of the US Shipping Act.
Pennsylvania-based MCS Industries, whose customers include Target, Walmart, Home Depot and Lowe’s, filed a lawsuit, citing both Cosco and Mediterranean Shipping Co (MSC).
MCS said the carriers had “unfairly and unreasonably” exploited customers and colluded to manipulate the market.
“Global shipping carriers have started to take parallel and surprisingly similar steps to support shipping prices and improve their profitability to the detriment of shippers and the public,” MCS argued, suggesting that this collusion was made possible by the fact that there are now only three covenants. which dominate over 90% of the main east-west trade routes.
“These collusive ocean alliances give the respondents a venue and an opportunity to coordinate discriminatory practices such as those alleged here to violate contracts with shippers like MCS in favor of exploiting profit opportunities in the cash market.” , alleges the prosecution.
On August 10, a bipartisan duo of lawmakers, pressed by agricultural exporters, introduces the Ocean Shipping Reform Act to Congress, a bill that would put in place new minimum requirements for service contracts and give the Federal Maritime Commission (FMC) increased powers.
California Democrat John Gerimundi, co-author of the bill, has denounced what he sees as an oligopoly in container shipping.
âThe problem was serious, the control of navigation by a handful or two of shipping carriers really eliminated the competition that had been in place for many years before the increased consolidation,â said Gerimundi.