Over the last 20 years shipping lines have formed and re-formed alliances and gradually consolidated through mergers. Today, the top three shipping alliances for the Asia to Europe route are 2M, Ocean Alliance and THE Alliance. Together, they are composed of 9 separate shipping companies, including most major shipping players.
What has caused this?
The market and industry over the last few decades has been extremely fragmented and as a result suffered from considerable price volatility. Larger carriers have been able to achieve maximum economies of scale and achieve cost savings to drive competitiveness. Smaller carriers have not been able to compete in this way and this has led to a number of mergers and acquisitions and thus the formation of shipping alliances.
What does it mean for today’s market?
Fewer, more financially robust, service providers should mean greater stability in service offerings and less volatility in market rate levels. The initial variance in service quality that we saw after the transition of alliances a few years ago has stabilized. We have also seen in the last year carriers becoming much better at managing capacity to meet demand.
During the past few years, shipping lines have invested together in new large ships (UCLVs) to drive down their operational costs to achieve cost savings to offset depressed freight markets. The growth of UCLVs has been seen as one of the major drivers for global alliances. The only way to fill ever-larger container ships, and obtain the potential economies of scale that they offer, is for carriers to pool their volumes on particular trade routes and share ships.
In 2019 the consolidation of shipping lines will continue and we may also see further vessel-sharing agreements between carriers in order to achieve high percentage utilisation of ULCVs.
What does PFE do?
We work with strong reliable partners who offer the fastest and most flexible services supported with space commitments to our customers.
These factors combined with our absolute determination to provide the best service levels possible continue to ensure we are well placed to work with you to meet your importing needs.
To download a pdf of our Alliances Progression Infographic click here.
