The following is an archived collection of our weekly insights through the month of March. Those who had signed up to our Interlog Insights newsletter received each week’s update to their inbox on the original release date. If you like what you see below, please feel free to sign up yourself to get these updates right as they come!
This month's insights
- Ocean Carrier Alliances
- Panama Canal
- Schedule Reliability
Week 4 - Originally released Mar. 22
Insight: A Preview of Shipping Alliances in 2025
Over the last few editions of Interlog Insights, we explored the service imagination behind the upcoming Gemini Cooperation shipping alliance between carriers Maersk and Hapag-Lloyd. Gemini’s envisioned network will adopt a service model that emphasizes main transshipment hubs with short line connectivity to various ports across Asia, Europe, North America, and other world markets. The vessel-sharing agreement is set to commence in February 2025.
That said, two carriers alone do not inhabit the world’s oceans. There are other, even larger, fishes in the pond, so to speak. As Maersk and Hapag-Lloyd transition into their next business venture, other ocean carriers have been announcing their plans for the future.
OCEAN Alliance renews partnership until 2032
Members of the OCEAN Alliance announced last week that they are reupping their partnership, extending it for another five years. The vessel-sharing agreement will remain in place until 2032.
The ocean carriers apart of OCEAN alliance are France-based CMA CGM, China-based Cosco Shipping, Taiwan-based Evergreen, and Hong Kong-based OOCL. Top executives with each carrier signed a memorandum of understanding last Friday, Mar. 15 in Shanghai to confirm their extended commitment.
In a CMA CGM news release, the carrier touts the partnership as stable and reliable, noting that it provides coverage of all world trade lanes. Launched in 2017, OCEAN Alliance is the world’s largest cooperative shipping network with a deployed capacity of 4.5 million TEUs, per Alphaliner.
The decision to stay together goes against the grain when it comes to the shakeups that will occur next year with the industry’s other major alliances—2M and THE Alliance.
THE Alliance will carry on, minus Hapag-Lloyd
With Hapag-Lloyd teaming up with Maersk next February, the German carrier will be leaving THE Alliance in January. This will leave the alliance with three remaining members: Japan-based Ocean Network Express; Taiwan-based Yang Ming; and, South Korea-based HMM.
Without their freund, THE Alliance will deploy a capacity of around three million TEUs. For comparison, Hapag-Lloyd’s Gemini pairing will utilize a capacity of 3.4 million TEUs.
2M will end, MSC (so far) will be on its own
The third and final major alliance will actually no longer exist in less than a year. The 2M Alliance, between Maersk and MSC, will be terminated in January 2025, a month prior to when Maersk launches the Gemini Cooperation.
The decision to split and end the decade-long partnership was mutual and made well before Maersk announced the Gemini agreement. The world’s two largest ocean carriers reasoned divergent strategies for the breakup.
That said, as industry experts successfully speculated, Maersk found another partner in Hapag-Lloyd to reimagination a new, post-2M, shipping network.
As of now, MSC, the other half of the soon-to-be dissolved 2M, is partner less. However, such a status is not compromising for the Switzerland-based carrier. Rather, it is completely viable, perhaps advantageous, for MSC to sail alone, alliance-free.
As it stands, MSC possesses over 5.7 million TEU capacity, representing a near 20 percent market share. While OCEAN Alliance possesses the largest cooperative network in the industry, MSC dwarves the capacities of any alliances or individual carriers. On top of this, the carrier has also queued up an impressive orderbook. This newbuild capacity alone outpaces Hapag-Lloyd’s existing capacity.
With that considered, the shipping behemoth does not need a co-captain to support a global trade network.
Continued cooperation until next January
There has sure been a lot of talk about the future of shipping alliances and rightfully so. In less than a year, the familiar make up of shipping alliances will be shuffled. With only OCEAN Alliance remaining unchanged, stakeholders are deservedly anxious about how these shakeups to global networks will impact their service and costs.
While time will tell how these new pairings play out, between now and February, 2M and THE Alliance have assured customers of continued cooperation.
In 2M’s case, MSC and Maersk have vowed their commitment to maintaining their services through the agreement’s January termination date. While THE Alliance (including current member Hapag-Lloyd) released a joint statement: “We wish to emphasize our unwavering commitment to maintaining a robust cooperation throughout 2024, ensuring that the highest standards of cooperation and exceptional service are delivered to our stakeholders and the industry at large.”
Watch our March webinar!
Watch our March webinar for the latest market updates, including delays into the U.S. West Coast, as well as a status on labor negotiations on the East and Gulf coasts.
Insight: South Carolina Ports Plan to Buy WestRock Site to Enchance Capacity
On Mar. 19, the South Carolina Ports Board of Directors voted to move ahead with a purchase sales agreement with WestRock paper mill site, which will help expand capacity at the Port of Charleston.
“The tremendous back from our state and an excellent partnership with WestRock allows us to make investments today that will support our state’s economy and create opportunities for future generations of South Carolinians,” Barbara Melvin, SC Ports President and CEO said in a press release.
With this extra land the SC ports say this will allow the terminal to handle 5 million containers, as well as doubling the feet of linear berth space from 2,460 feet to 5,000 feet
Additionally, the existing North Charleston terminal will be brought more up to date including an optimized layout, improved cargo-handling equipment and significant new container capacity.
“Modernizing the terminal, raising the Don Holt Bridge, deepening the Cooper River and purchasing the former WestRock property are all critical components that will yield a state-of-the-art North Charleston Terminal,” Melvin said. With hopes that they will bring in ships of 15,000 TEUs and bigger to North Charleston.
Week 3 - Originally released Mar. 15
Insight: Stakeholders Weary of Gemini's Scheduling Claim
When Maersk and Hapag-Lloyd announced their upcoming 2025 shipping alliance, the two ocean carriers touted that the new network would achieve greater than 90 percent schedule reliability.
That said, it is clear to everyone that this alliance, titled the Gemini Cooperation, will be an ambitious undertaking. And, as stakeholders begin to speculate, perhaps too ambitious. According to the Journal of Commerce, the current rate of schedule reliability across the world’s trades stands at 51 percent. Even in pre-pandemic times, scheduling has never been at or above 90 percent.
Maersk, Hapag-Lloyd executives confident in Gemini’s service model
Executives of both Maersk and Hapag-Lloyd were present at S&P Global’s TPM24, a marquee conference centered around international container shipping. The event was held on March 3-6 at the Long Beach Convention Center.
“If we are able to break what is today a ceiling in ocean reliability of anywhere between 80 and 85%, and deliver a 90-95% reliability, we’re able to offer our customers a significant reduction in variability or an increase in consistency … in terms of on-time performance, and as a result a reduction in inventory costs,” an executive with Maersk explained to CNBC at the conference.
That statement sure sounds ideal on paper, but how can stakeholders be convinced that the Gemini network will usher in such a historically great performance?
As recorded in last week’s edition, Hapag-Lloyd CEO Rolf Habben Jansen explained that the imagined success of Gemini centers around its business model—“hub and spoke”. In short, their fleets of large containerships will call at select ports designated by their network. Cargo aboard these massive vessels will then be dispensed onto several smaller vessels which will transport volumes to other ports, labeled as feeders under the new network. This model places a heavy emphasis on transshipment. Both Maersk and Hapag-Lloyd are confident of their assets, mainly terminals, to pull this model off with near-perfect schedule reliability.
The operational theory of the two carriers’ rests on the understanding that less delays will occur to a service if the main line calls at fewer ports. Since the model has larger ships making a single stop at one port and not a string of several destinations, Maersk and Hapag-Lloyd anticipate their vessels will benefit from better utilization in Gemini’s structure.
Concerns over dependence of transshipment hubs
There is reason to believe that Gemini’s service model would mitigate possible delays from having less direct calls at multiple ports, but there’s also a major caveat to this.
Perhaps the biggest reason stakeholders remain skeptical about the network falls on the transshipment side of things. While the carriers assure their offering will be resilient, memories of supply chain disruptions from yesteryears still ring in everyone’s minds.
During pandemic-era congestion, freight movement within terminals was whiplashed. Stakeholders note transshipment ports were especially vulnerable to these impacts and suffered from significant delays. The likes of which have left a bad taste in the mouths of many shippers, who often had little to no visibility while their freight navigated these logistical nightmares.
For Gemini to approach its reliability standards, the network’s main ports (transshipment hubs) must be ready to handle this newfound responsibility. This may mean having to bend their operations and capacity in order to accommodate Gemini’s service commitments. If there’s a hiccup at one of these hubs, the sight of a fully-loaded 20,000 TEU ship arriving the next morning would spell a challenge.
Insight: Panama Canal Authority Announces More Daily Transits
In a shipping advisory published on Mar. 11, the Panama Canal Authority announced they will increase daily transits starting in mid-March.
Two auction reservation slots starting Mar. 18 and one additional slot for transits starting Mar. 25.
“The introduction of additional slots reflects our ongoing commitment to maintaining the Panama Canal’s status as a premier global trade route,” the PCA said in their advisory.
Here is a table that the PCA included in their advisory that shows what the current period of transits look like and what they are expected to look like starting Mar. 18 and 25.
The authority says these measures will be in effect until conditions call for changes, which they would announce in a timely manner.
The Panama Canal is currently in its dry season, with ‘rainy season’ typically occurring May through December.
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Week 2 - Originally released Mar. 8
Insight: 'Just the Two of Us', Gemini Cooperation Will Stay a Two-Member Alliance
The vision behind next year’s Gemini Cooperation shipping alliance continues to shed light as the February 2025 launch date inches closer every day. The soon-to-be vessel sharing agreement is between ocean carriers Maersk and Hapag-Lloyd, as both vacate their existing alliances next January.
In last week’s edition of Interlog Insights, more information about the agreement’s service network was discussed. This week, executives with Hapag-Lloyd told stakeholders that the two-member alliance will stay that way—two members.
Two-member ocean alliance will follow a model likened to air freight
Speaking at this week’s TPM24 conference in Long Beach, Hapag Lloyd CEO Rolf Habben Jansen assured attendees that Gemini will not require additional carrier-members to satisfy its ambitions of industry-leading ocean freight coverage. Rather, the executive implied the decision of Maersk and Hapag-Lloyd to partner, and only partner together, was purposeful. Jansen added that Gemini will operate differently than other industry alliances and, in Gemini’s case, two members will be sufficient. A possible interpretation: three’s a crowd!
Specifically, Jansen noted Gemini’s structure is unique from other shipping agreements based on its “hub and spoke” model. He touts it as a business practice with proven success in other transportation modes, namely air freight. “If I buy airfreight from Shanghai to Hamburg, the plane flies to Frankfurt and then it gets on the truck. The plane doesn’t stop in Frankfurt and then flies on to Hamburg with two or three panels,” Jansen explained.
Maersk and Hapag-Lloyd are determined to apply the model to the ocean freight sector as Jansen advocates it will promote better utilization of their vessels and other assets, while also leading to higher levels of schedule reliability. Under this model, the Gemini network will have three service calls on both the origin and destination sides, lowering the chances of delays.
This draws parallels with the logic of international air freight, as Jansen alluded to. Planes won’t land at multiple airports throughout a region, jettisoning off cargo at each stop. Rather, they will stop at a major hub and, from there, cargo bound to various destinations will be appropriately distributed by truck.
For Gemini’s ocean version, large containerships will call at major hubs designated by their network. Cargo then will be dispensed across a wide array of self-titled shuttle services which will transport volumes to other ports, labeled as feeders under Gemini’s network.
At this time, Maersk and Hapag-Lloyd have identified five main ports as central gateways in Asia: Singapore; China’s Shanghai, Ningbo, and Yantian; and Malaysia’s Tanjung Pelepas.
As outlined in last week’s Interlog Insights, notable, large, container ports are absent from this list and are set to be relegated to feeder ports. This has particularly concerned several Asian ports, including South Korea’s Busan which has urged the carriers to restore direct calls at the port.
While speaking confidently of the model, Jansen understands that such a system requires significant capacity, especially as it expands over time. The executive went on to tell stakeholders that investment in port infrastructure will be a continued priority of this vessel sharing agreement.
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Insight: Global Schedule Reliability in January Dips
Global schedule reliability for the month of January dipped to 51.6 percent; the lowest since September 2022, per a Sea-Intelligence report.
Global Liner Performance is a monthly report on schedule reliability in the container shipping industry. The monthly report by Sea-Intelligence that measures schedule reliability and vessel delays throughout all deep-sea liner services, based on more than 12,000 monthly vessel arrives, as well as measures and benchmarks the schedule reliability performance of over 60 container carriers in 34 different trade lanes, throughout over 300 liner services/loops – according to Sea-Intelligence.
The graph below shows the fluctuations of global schedule reliability from 2019 to January 2024, which is just slightly below where schedule reliability was at in January 2023 – which was at 52.6 percent.
It shouldn’t come as a huge surprise for this decrease, as diversions in the Red Sea had an impact, especially on the Asia to Europe and Asia to U.S. East Coast lanes.
Furthermore, on-time performance from Asia to the U.S. East Coast dropped 6.1 percentage points (to 33.8 percent) in January, per Sea-Intelligence data. While the Asia – U.S. West Coast trade fell nine percentage points in January (to 48 percent) and the trans-Atlantic lane fell 6.5 percentage points.
Additionally, CMA CGM was listed as the most reliable carrier in January in comparison to last year, with a schedule reliability percentage of 54.7 percent.
Week 1 - Originally released Mar. 1
Insight: Gemini's Lonely Hearts Club - Key Asian Ports Set to Lose Main Calls
Insight: OCEAN Alliance Extends Partnership until 2032
Gemini Cooperation is set to relegate select Asian ports from main gateways to feeder ports under its envisioned network. The vessel sharing agreement, launching in February 2025, is a new wave pairing between Maersk and Hapag-Lloyd as both ocean carriers exit their current alliances early next year.
Gemini’s network will consolidate the carriers’ calls at just five main ports in Asia: Singapore; China’s Shanghai, Ningbo, and Yantian; and Malaysia’s Tanjung Pelepas. Notably absent from the list are other major ports, like South Korea’s Busan.
Busan not fond of the boot
Under Gemini’s proposed framework, Busan may receive the shortest end of the stick. The port is set to be omitted from virtually all its main line calls by Maersk and Hapag-Lloyd on well-trafficked services between Asia, Europe, and the U.S. It appears Busan would only keep main calls on two Asia-U.S. East Coast and one Asia-Middle East services.
In response, South Korea’s largest port, also within the world’s top ten in container throughput, has compelled Maersk and Hapag-Lloyd to reconsider their vessel schedules aboard the new network and retain some calls at the port.
Lee Eung-hyuk with the Busan Port Authority told the Journal of Commerce: “Maersk and Hapag-Lloyd’s announcement that they will not call at Busan Port on their Europe services will be a significant disadvantage for their existing customers, [such as] Korean import and export shippers.”
Several other Asian ports downgraded to feeder status
Hong Kong will also join the club as otherwise discretionary cargo will instead be trucked or fed to nearby Yantian, one of the four marine terminals in Shenzhen.
From there, the list goes on. China’s ports of Xiamen and Dalian are set to lose direct connectivity, while Taiwan’s Kaohsiung and Vietnam’s Ho Chi Minh will also cease their statuses as main gateways. Additionally, several ports in Japan, including Tokyo, will also seal their fates as feeder ports under Maersk’s and Hapag-Lloyd’s Gemini network.
Kindred to Busan, stakeholders of the affected ports are holding out hope to persuade the carriers to restore some of their direct calls. While preliminary scheduling has been released, Gemini’s network is not finalized yet. In theory, the carriers could revise the structure and, at least, partially accommodate these requests. However, it is unclear whether Maersk and Hapag-Lloyd are malleable to make such adjustments.
Gemini Cooperation is one year out
According to Maersk, Gemini Cooperation will cover prominent global trades: Asia-North Europe; Asia-Mediterranean; Middle East-Europe; Middle East and India-Mediterranean; Asia-Middle East; Asia-U.S. East Coast; and Asia-U.S. West Coast. The network will comprise of 26 mainline services, supported with dedicated feeder services to and from transshipment hubs operated by the carriers. These feeders, which Maersk calls shuttles, offer connections between these hubs and main gateways. The Asian ports mentioned previously, like Busan, are set to be repurposed as feeders under Gemini’s network.
The cooperative agreement is set to take effect in February 2025 following Maersk’s and Hapag-Lloyd’s respective departures from their current alliances.
Maersk, the world’s second-largest ocean carrier, is closing the door on its near-decade run with fellow carrier giant MSC. Their 2M Alliance will be terminated in January 2025, leaving MSC alliance-free for the foreseeable future.
In a meeting in Shanghai on Feb. 27, 2024, carriers with OCEAN Alliance signed and reached an extension, for at least five additional years from 2027 – which was the year their operational agreement was set to expire.
Full statement from CMA CGM Chairman and CEO, Rodolphe Saadé,
“Since 2017, the CMA CGM Group has been committed alongside its partners within the OCEAN Alliance to combine the largest shipping network with best-in class services. 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. Our diversity is our strength, together we will continue to pioneer our industry!”
There was some speculation that some carriers would leave their respective partnerships to join THE Alliance, as Hapag-Lloyd exits that alliance at the end of January 2025.
Major ocean carrier alliances
There’s been a lot of news in the last year or so of carriers switching up or leaving alliances. Here’s a brief description of what alliances some carriers are a part of.
The OCEAN Alliance
This alliance was formed in 2017 and includes CMA CGM, Cosco, OOCL and Evergreen.
THE Alliance (THEA)
This alliance, formed in 2017, includes ONE, HMM, Yang Ming and Hapag-Lloyd. However, Hapag-Lloyd is expected to leave the alliance at the end of January 2025 and will join Maersk in the Gemini Cooperation in February 2025.
2M
This alliance was formed in 2015 with MSC and Maersk. However, Maersk is leaving this alliance to form the Gemini Cooperation with Hapag-Lloyd at the end of January 2025.
MSC will be without an alliance and plans to remain by themselves – at least for now – which will put an end to the 2M alliance.
Gemini Cooperation
This partnership includes Hapag-Lloyd and Maersk and is expected to start February 2025.
While more details are expected to emerge throughout this year, this will be a long-term partnership that will cover seven trade lanes: Asia-USWC, Asia – USEC, Asia – Middle East, Asia – Mediterranean, Asia – North Europe, Middle East – India / Europe and Transatlantic.
The partnership will comprise of a fleet pool of about 290 vessels, with a combined capacity of 3.4 million TEUs.
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