Robert Wright is the FT's shipping and logistics correspondent
Worldwide container shipping is to undergo its biggest realignment in a decade after an earnings slump pushed the operators of the second and third-largest fleets - Switzerland’s Mediterranean Shipping Company and France’s CMA CGM - into forming a market-leading alliance.
The alliance, signed on Thursday between the Aponte and Saadé families that control the two companies, will apply on a selection of important routes - between Asia and northern Europe, Asia and southern Africa and South America and the rest of the world. Since the two already co-operate on Asia to North America services and their combined fleets account, according to Alphaliner, the Paris-based consultancy, for 21.7 per cent of the world’s container vessels, the operation will probably control a larger fleet than Denmark’s Maersk Line.
The pair have formed the alliance amid a glut of container ship capacity that has pushed nearly every big operator deep into loss and forced a number to raise capital or reconsider their future in container shipping. There are also now signs that container volumes on the key Asia to Europe route, which were still growing as recently as September, could start to contract, worsening the crisis.
The two family controlled lines, both started in the 1970s in the Mediterranean, have previously shunned the alliances by which some smaller container shipping lines seek to compete with the industry’s bigger operators.
Rodolphe Saadé, executive officer of CMA CGM, told the Financial Times it was important in a difficult environment to keep an open mind.
“When it comes to two family-run businesses willing to co-operate . . . in order to fight a difficult situation, it makes quite a lot of sense,” he said.
Diego Aponte, MSC’s vice-president, said the company was very happy to have signed the broad-based partnership.
“The agreement offers us new opportunities to optimize the use of our respective fleets, improve our transit times and increase our performance,” he said.
CMA CGM underlined the depth of the crisis facing the industry by announcing alongside the alliance that it had made a $223-million net loss on $3.86-billion revenue for the third quarter. MSC, whose founding family is from southern Italy, has never published financial figures.
The formation of the alliance comes only days after Malaysia’s MISC announced it would withdraw from container shipping altogether after losing an aggregate $789-million in the industry over three years. Israel’s Zim has announced it needs $100-million new capital and Chile’s CSAV has said it needs to raise $1.2-billion.
There are already three alliances of medium-sized container lines - the Grand Alliance, New World Alliance and CYKH Alliance. All operate on lines similar to airline alliances, operating services jointly and sharing space on each other’s sailings.
Maersk, whose fleet accounts for 15.8 per cent of worldwide capacity, has operated the largest fleet since it took over the U.S.’s Sea-Land amid a wave of industry mergers in the late 1990s.