Next year’s landscape for container shipping alliances is looking a little clearer.
The Gemini Cooperation of Maersk and Hapag-Lloyd got the go-ahead from the Federal Maritime Commission (FMC) on Monday, setting the stage for the next era of vessel-sharing collaborations.
The cooperation will officially commence in February 2025 under ongoing monitoring by the FMC, which has still held its formation under scrutiny.
“I have questions and concerns about whether the Gemini Cooperation Agreement filed with the FMC has, or will, result in anti-competitive consequences that violate the Shipping Act,” said FMC chair Daniel Maffei in a statement. Maffei indicated the agency “had no viable way to stop it from taking effect at this time.”
That same day, Mediterranean Shipping Company (MSC), the world’s largest container shipping company, unveiled a stand-alone East-West service network that will offer weekly services via either the Cape of Good Hope or the Suez Canal come February. The dual offerings have been given even as the carrier still reroutes most of its vessels around Africa due to the ongoing Red Sea disruptions.
MSC’s future network will include 34 loops across five key trade lanes with the goal to provide more extensive coverage and flexible routing options. The services include seven loops for Asia-to-North Europe; six loops for Asia-to-Mediterranean; four loops for Asia-to-North America West Coast; six loops for Asia-to-North America East Coast; and 11 loops for the trans-Atlantic network.
The transit times largely vary across the service lines, with journeys via the Suez Canal estimated to be seven to 12 days shorter than the voyage around Africa.
In January 2025, the 2M alliance between MSC and Maersk will dissolve, making way for the shipping shakeup the next month. And Hapag-Lloyd is leaving THE Alliance as part of the jump to Gemini, with its former partners HMM, Ocean Network Express (ONE) and Yang Ming creating a new cooperation agreement of their own called the Premier Alliance.
While MSC’s East-West trade network appears to show the might of its own fleet, which is estimated to consist of 854 ships, according to Alphaliner, the shipping giant is still playing well with others.
MSC signed a new three-year agreement with ZIM to provide six weekly sailings between Asia and the U.S. East Coast starting February 2025. The deal includes slot swap and vessel-sharing agreements.
The Swiss ocean carrier also established a slot exchange partnership with the Premier Alliance to enhance its presence on Asia-to-Europe trade routes. The partnership will involve nine services.
Meanwhile, the Ocean Alliance of CMA CGM, Cosco and Evergreen hasn’t announced any changes to its existing “Day 8” network, effective since April 2024.
“MSC’s planned swap slots with Premier (Asia-Europe) and ZIM (trans-Pacific) have put to rest any concerns that it wouldn’t be able to compete with the other alliances on a standalone basis, and will see it overtake Ocean with the most weekly services in the sample of East-West trades from next February, assuming no change to Ocean’s product,” said Simon Heaney, senior manager of container research at Drewry Supply Chain Advisors, in an analysis Thursday.
Like MSC, the Gemini partners also anticipate offering contingencies across the Suez Canal and Cape of Good Hope. According to Heaney, members from both Maersk and Hapag-Lloyd said a decision will be made in October as to which version will go live when the cooperation goes live in February.
“Neither would be drawn on which version they think is the more likely to be activated, nor would they give a timeline for the expected full-scale resumption of Suez Canal transits,” Heaney said. “But with one Gemini representative saying that there is ‘no credible end in sight’ to the diversions and that they will only consider Suez when it is completely free from the risk of attack, we can confidently assume that the Cape of Good Hope version is the current default network setting.”
As plans for the alliances settle in the wake of the Red Sea disruptions, the carriers continue to roll in the dough, making $5.4 billion in net profit in the first quarter and $10.2 billion in income in the second quarter, according to container shipping expert John McCown.
According to McCown, pricing and volume data is telegraphing that there will be another material increase in net income in the third quarter. MSC, which isn’t a public company, is not including in these statistics.
McCown estimates that the industry will earn $14.7 billion in profit for the third quarter on revenue of $78.4 billion.
Looming East Coast port strike tanks spot rates
2025 profitability numbers may not be as kind if spot freight rates keep their steady decline.
Although container prices into the U.S. East Coast had escalated in June and July as more shippers front–loaded goods in anticipation of a potential coastwide strike at the ports, the rates have fallen drastically this month as demand for service in that direction falls.
This week alone, ocean spot freight rates from Shanghai to New York plummeted 21 percent to $6,661 per 40-foot container, the steepest of all price dips among the eight major trade lanes, according to Drewry’s World Container Index (WCI).
Since July 18, rates on that trade lane have fallen 31 percent.
Some experts have indicated that rates are set to soar again after Oct. 1 if a strike indeed does play out, particularly since demand would reignite once a work stoppage ends.
Average container prices across trade lanes have fallen off in recent months. The WCI decreased 13 percent from last week to $4,168 per container as of Sept. 12 and is down 30 percent from 2024’s peak of $5,937 on July 18.
