The Ocean Alliance, the largest ocean freight shipping alliance comprising leading carriers, has extended its agreement by five years, reinforcing its commitment to partnership and collaboration. On February 27th, the CEOs of carriers like COSCO Shipping, OOCL, CMA CGM, and Evergreen met in Shanghai to sign a MOU agreeing to extend the OCEAN Alliance until 2032. A significant move like this is undoubtedly set to alter the landscape of the ocean freight industry and have considerable impact on the sea freight forwarders. Keep reading to learn in details the impact of the extension of the Ocean Alliance and how it could affect the workings of the container shipping sector.
Ocean Alliance Extension and its Impact on the Ocean Freight Industry
A bit about the Ocean Alliance
Established in the spring of 2017, the OCEAN Alliance identifies itself as the world’s largest ocean freight shipping alliance, positioning as the ‘backbone of trade routes for international commerce.’ Emphasizing the benefits of synchronized schedules and shared capacity, the alliance aims to deliver top-notch service, quick transit times, comprehensive port coverage and competitive sailing frequencies.
Maintaining a consistent commitment for seven years, the OCEAN Alliance has played a vital role in sustaining a stable supply chain while adhering to all relevant laws and regulations. With this extended agreement, the alliance reaffirms its primary objective: to continue providing the best service offerings to its partners’ customers in the years ahead. To quote Rodolphe Saadé, Chairman and CEO of the CMA CGM Group, “The decision to extend our cooperation for at least five more years forges our commitment to meet our customers’ needs and build even more secure, reliable, and sustainable supply chains.”
As outlined in the press release, Ocean Alliance encompasses seven major East and West trades, facilitating connectivity between Asia and Northern Europe, the Middle East, North America’s East Coast and West Coast, and the Mediterranean. OCEAN Alliance seeks to send a positive signal to its clients by confirming the extension of cooperation for at least five years. Moreover, a a sustainable and responsible alliance, they are committed to providing sea freight forwarders with continuous high-quality transportation, contributing to a internationally stable supply chain in compliance with all applicable laws and regulations.
The case of Maersk and MSC
The THE Alliance found itself compelled to reaffirm its commitment to seamless collaboration in the wake of the announcement that German firm Hapag-Lloyd plans to depart the alliance in 2025. Hapag-Lloyd intends to join forces with Maersk in a new alliance named the Gemini Cooperation. With the Maersk-MSC split and the upcoming Maersk alliance with Hapag-Lloyd in 2025, the ocean freight industry was left in contemplation about the fate of the remaining alliances. The move by Hapag-Lloyd formed an industry shakeup, following the announcement last year by Maersk and MSC Mediterranean Shipping Company that they would be terminating their alliance.
Lars Jensen, CEO and Partner at Vespucci Maritime, expressed his surprise in a LinkedIn post, stating, ‘I had expected them to split up, but here we are.’ The Ocean Alliance, formed in 2017, had surpassed the capacity of Maersk and MSC’s 2M alliance in Asia-Europe and Asia-North America trade. As the 2M alliance concludes in 2025, MSC is left without an alliance. Jensen anticipates that MSC will likely operate independently, given its scale and the flexibility associated with not having to compromise with partners.
Impact of the agreement on the container shipping industry
Dedicated to attaining Net Zero by 2050, the CMA CGM Group is actively deploying leading-edge solutions to diminish the environmental footprint of shipping and logistics. The company aims to have over 120 container ships powered by alternative green fuels in operation by 2027, with some already deployed within the OCEAN Alliance footprint. This expansion reinforces the Alliance’s commitment to providing top-notch services to its partners’ customers in the upcoming years.
Rodolphe Saadé, Chairman and CEO of the CMA CGM further commented, “The decision to extend our cooperation for at least 5 more years forges our commitment to meet our customers’ needs and build even more secure, reliable and sustainable supply chains. Our diversity is our strength, together we will continue to pioneer our industry.”