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Six carriers join hands to form THE Alliance

Six carriers join hands to form THE Alliance
Six container lines – Hanjin Shipping, Hapag Lloyd, K Line, MOL, NYK and Yang Ming – have announced the formation of a new partnership named THE Alliance, in response to the recent alliance shake-up in container shipping.

The new alliance will cover all East-West trade lanes Asia-Europe-Mediterranean, Asia-North America West Coast, Asia-North America East Coast, transatlantic and Asia-Middle East/Persian Gulf/Red Sea.

The lines announced that a binding agreement has been concluded by all partners and THE Alliance is scheduled to start operations in April 2017, subject to approval by all the relevant regulatory authorities. The initial term of the cooperation will be five years.

A seventh carrier, UASC, is anticipated to become part of THE Alliance as it is currently engaged in merger talks with Hapag-Lloyd, already a member of the new alliance.

With UASC potentially onboard, THE Alliance will boost a total carrying capacity of more than 4m teu. Excluding UASC for now, the six members have a combined 3.5m teu or 18% share of the global container fleet capacity, amounting to more than 620 ships.

“This agreement is a milestone and will enable the six partners of THE Alliance to offer sailing frequencies and direct coverage in the market,” member carriers said in a joint statement.

“The unique product will feature enhanced port coverage in Asia, North America, Europe including the Mediterranean as well as Middle East. The network of THE Alliance will ensure frequent sailings, high reliability and very attractive transit times for all shippers in the East-West trade lanes.”

The latest alliance followed earlier announcements of the mega-partnership dubbed Ocean Alliance, made up of CMA CGM, Coscon, Evergreen and OOCL. The coming together of the four lines will see them control about 34.5% of the overall Far East-Europe capacity, edging ahead of the 2M alliance of Maersk Line and MSC with around 33.4% share, according to estimates by Alphaliner.

Once formed, the six members of THE Alliance could take approximately 23% share on the Far East-Europe trade, and the inclusion of UASC could increase their share to around 28%, Alphaliner estimates, making THE Alliance the so-called new ‘third force’ in liner shipping.

All three leading Japanese lines, K Line, NYK and MOL, are part of THE Alliance. For South Korean lines, both Hanjin Shipping and HMM are facing restructuring but the former has made the team. Where this leaves HMM remains to be seen.

Today, the members of THE Alliance remain in different partnerships, with MOL, NYK and Hapag-Lloyd as part of the G6 alliance, and Hanjin Shipping, K Line and Yang Ming are in the CKYHE alliance.