Ocean Alliance extends deal until 2027

two cosco cargo container ships docked at port

January 18, 2019 - Members of the Ocean Alliance met in Hainan, China, on Friday to sign a five-year extension of the "world's largest operational agreement between shipping companies," according to a CMA CGM press release.

CMA CGM, COSCO, Evergreen and OOCL will participate in the deal through 2027. The original agreement, which began in 2017, did not expire until 2023.

During the visit to China, the companies also launched the "Ocean Alliance Day 3 Product," which will have the four lines deploy 330 containerships with a total capacity of 3.8 million TEUs starting in April 2019. 

The new deal locks the participation of four of the top 10 shipping lines in the world into the most expansive shipping alliance, by capacity, at a time when new players are looking to enter the global market.

After the ocean liner industry underwent a wave of consolidation in 2016 and 2017, the top six players (which now control more than 70% of the world's shipping capacity) coalesced into three operational alliances.

While companies like Evergreen (the 7th largest shipping line, according to Alphaliner data) and Yang Ming (8th largest) managed to secure a place in the maritime alliances, others were more limited.

HMM (9th largest), for example, did not reach full participation in Maersk Line and MSC's "2M Alliance" and instead was relegated to a three-year slot-sharing deal. ZIM (11th largest) signed a similar deal with 2M last year.

But the slot-sharing deals are limited, both in scope and duration. Rumors are swirling HMM is considering leaving the 2M partnership after its contract expires in 2020. A long-term deal with the Ocean Alliance may be a better fit: HMM is reportedly in talks to become the fifth member of the rival group.

Source: Supply Chain Dive