Maersk’s new shipping alliance causes confusion in freight forwarding industry

Mads Drejer, chief operating officer of Scan Global, emphasized that freight contracts usually need to be negotiated in advance. "This applies not only to us, but also to our customers. We need to know which ports are applicable, transit transit times and port of call sequence information. This critical information should be announced as early as possible."

Maersk and Hapag-Lloyd have shocked the shipping industry by announcing a new alliance called the Gemini collaboration. The alliance will begin operations in February 2025, with the two shipping companies sharing space on each other's ships. Freight forwarders will book space on these ships on behalf of their customers.

The "Gemini" alliance covers 26 trunk services across seven major trade corridors. As part of the agreement, the collaborative plan will involve approximately 290 ships operating with a total capacity of approximately 3.4 million TEU. Among them, 60% of the capacity will be invested by Maersk, while 40% will be invested by Hapag-Lloyd. It is expected that in the future, when the overall cooperation is fully operational, the punctuality rate of shipping schedules will exceed 90%. This would be well above the liner industry's current average of 60%. 

Both parties stated that a 90% on-time rate will be achieved by reducing the number of ports of call. However, this strategy may create challenges for freight forwarders, who will need to develop more partnerships at non-call ports.

Mads Drejer said that after the dissolution of the 2M alliance formed by Maersk and MSC, he initially made it clear that it would operate independently and not seek new alliances. However, the sudden announcement of a new alliance with Hapag-Lloyd is indeed surprising.

Maersk has not yet made any comment, saying only by quoting the press release announcing the alliance: "Further details about the Gemini collaboration, including new shipping schedules, will be announced in due course."

Maersk and Hapag-Lloyd announced that one of the goals of the new alliance is to achieve a ship on-time rate of 90% to ensure that customers deliver goods on time. A report from the analysis company Sea-Intelligence shows that in November 2023, the punctuality rate of major shipping companies was only 62%, and during the epidemic, the punctuality rate was often as low as 30%. Chief analyst Peter Sand said this is one of the biggest obstacles currently facing shipping companies. To achieve its goals, the Gemini Alliance will call at fewer ports. Maersk and Hapag-Lloyd, meanwhile, will focus calls at ports where both companies have invested heavily in recent years.

Peter Sand emphasized: "We still need to study their plans in depth, because the current global on-time rate is about 60%, and they should be at least 80%."

This not only involves route planning, but also a problem that shipping companies need to put in more efforts.“As far as we know, the new alliance will make greater use of feeder services by barges. This means that there will be fewer stops during transportation from Asia to Europe, which is a breakthrough.” Mads Drejer said: “But we still need to understand The idea behind it and the way it’s set up.” 

While the new partnership model is beneficial for shipping line customers, it may pose challenges for freight forwarders. As mentioned before, they need to find more partners in ports where the Gemini Alliance does not call.