Ocean carrier alliances are big, powerful… and evolving.

The real structure of the global supply chain resides in the ocean carrier alliances. From an organizational perspective, it is the service schedules within the big three ocean carrier alliances that provide the framework for the global supply chain.

This is not new. In various forms, ocean carriers have been cooperating in scheduled services or defined trade lanes for centuries. In some ways, the new generation of shipping alliances is the successor to the shipping conference system of the 1880s.

What’s different now – besides the terms by which ocean carriers can act cooperatively without evoking anti-monopolistic retribution – is the concentration of line haul capacity largely into three ocean carrier alliances: 2M, THE Alliance and Ocean Alliance (see chart).

Collectively, the 2M Alliance (Maersk and MSC), THE Alliance (Hapag Lloyd, ONE, Hyundai Merchant Marine and Yang Ming) and the Ocean Alliance (COSCO, CMA CGM and Evergreen) deploy 3,126 vessels with over 20 million TEUs of capacity. This total represents around 80% of the capacity of the containership fleet and an even higher percentage of the line haul capacity.

The big three ocean carrier alliances are composed of nine of the top ten container lines. It is the concentration of capacity that enables the tripartite of carrier alliances to function effectively. For example, the 2M alliance carriers deploy some 1,301 vessels of just over 8 million TEUs of capacity while the Ocean Alliance members have 1,258 ships with over 7 million TEUs of capacity. The Alliance (THEA) is the smallest of the three but still the members command a fleet of 641 vessels of over 4.7 million TEUs. While not all the member vessels operate solely within alliances at any given moment, the sheer size of the collective tripartite gives pause for thought.

Alliance Advantages – Everybody into the pool

Basically, a shipping alliance is the pooling of ships [generally the same type of ships] by various carriers with the goal of running regular style liner services. The advantage of vessel pooling for the carriers is largely one of streamlining scheduling and thus more efficient tradelane and port coverage. With fewer service redundancies, deployments can be made with far more efficient utilization over a much wider number of service loops. Since the business of shipping has inherently high upfront asset costs, collaboration with other carriers with similar service strengths and goals is one of the most straight forward ways of containing costs.

Carrier collaboration within the alliances covers a wide spread of organizational operations. While typical carrier ‘backroom’ work like stowage, scheduling and maintenance are nuts and bolts features of a shipping alliance, capacity planning is what makes the whole alliance system work. The principal mechanism used to assign a carriers’ contributions or slot allocations over various strings is the slot charter agreements (SCAs). The “slots” are chartered by a carrier from another carrier(s) for a specific period of time on…

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