On the 17th January 2024, the 33rd day of the Red Sea crisis, Maersk and Hapag-Lloyd announced that they were forming a new shipping alliance – The Gemini Cooperation – in a major shake-up to the container shipping market on the East-West trade lanes.
Industry analysts have been predicting that with 2M’s demise already in the works for 2025, the remaining alliances would be breaking up over the coming year and we would see a new alignment of partnerships on the east-west trade.
Hapag-Lloyd will exit THE Alliance and link up with Maersk in February 2025 after the dissolution of the 2M Alliance, to form the Gemini Cooperation’.
This will have fallout and an impact across all the alliances as vessels are repositioned and new loops are formed as a result of the global adjustments. It will be coordinated and managed, but there is an inevitable consequence of such large scale changes.
Operating a combined fleet of 290 vessels (equivalent to 3.4 million TEUs) Gemini will cover seven global trades, including coverage of the Europe – Middle East and Indian Subcontinent trades, besides the East-West trades.
Gemini’s network will be structured around 12 ‘hub-and-spoke’ terminals in Asia, EMEA, North and South America, from which Gemini will offer 26 mainline services, with schedule reliability in excess of 90%, a level that would differentiate Gemini from other alliances.
This leaves ONE, Yang Ming and HMM in a very vulnerable position, potentially unable to build a network matching those of the Ocean Alliance, MSC and Gemini, with the loss of the Hapag vessels and inclusion in container inventory.
The pressure is then on these three carriers to either lure a new partner out from Ocean Alliance, or re-invent a new service concept. Whatever the outcome there will be further ripples that are bound to occur.
But, with the playing field having changed so radically the pressure is also on Ocean Alliance members CMA-CGM, COSCO and Evergreen, who will be asking themselves whether the current alliance setup is still fit for purpose or whether a new partnership might be better.
Additionally, the removal of the EU anti-trust exemption by the end of April 2024 could add to the pressure on Ocean Alliance as they will be significantly larger than the other groupings, and could well become the focus for competition authorities if they have a political need to show action following the exemption removal. This is yet to unwind.
While Maersk and Hapag-Lloyd will be part of the Gemini partnership for three years, after which a 12-month notice period will be required, Alliances tend to have a lifespan of roughly 5-8 years, which means the re-calibration we see now is most likely be the shape of the market on the East-West services into the early 2030s.
So yet more turmoil ahead and further unpredictability within the global logistics arena, that will need to be managed and any issues mitigated.
You will be pleased to learn we are experts in ensuring that the best-fit options on service are designed and created for you regardless of the market conditions and challenges that are current and ahead.
We will keep you advised and updated regularly on continuing developments within the container ocean freight market throughout 2024. It’s what we do – create transparency so that we can evolve with our tailored solutions.
If you have any questions or concerns about the Gemini Cooperation, or would like to discuss the wider implications of the shipping alliances, please EMAIL our Chief Commercial Officer, Andy Smith.