An integrated logistics company A.P. Moller-Maersk also known as Maersk, which is the world’s largest shipping line ended a decade partnership of pooling cargo on their vessels as the competitiveness in global logistics heats up. The 2M alliance, a capacity-sharing deal that the companies formed in 2015, will stop in 2 years so the two businesses can pursue their individual strategies, according to a joint statement from MSC and Maersk.
Following the news, Maersk shares dropped as much as 4.9 per cent in Copenhagen amid concerns that the split could result in increased overcapacity and falling freight pricing. At this time, Maersk focusing on integrating the ocean operations with those on land and they’re taking back more control they need especially on their backbone- the east-west corridor from Asia.
The 2M alliance, a capacity-sharing deal that the companies formed in 2015, will end in 2 years
Maersk company is evolving from a shipping line to a transport company that manages the entire supply chain for its clients. Privately owned MSC, located in Geneva, has the largest order book for new ships in the industry and supplanted Maersk as the top container carrier in terms of total owned and chartered capacity one year ago.
In recent years, both MSC and Maersk have sought to expand their land-based transportation and air freight sector where profit margins for end-to-end services are higher. They have done so partly through a series of acquisitions, financed by record profits from booming container freight prices. The 2M partnership has allowed the 2 shipping lines, which together control about 1/3rd of the world’s container capacity, to divert customers’ to cargo on each other’s ships and share agreements between airlines. They created the alliance to reduce costs at a time when the industry was constrained by an overcapacity of vessels.
Maersk company is evolving from a shipping line to a transport company that manages the entire supply chain for its clients
Maersk currently has Twenty-nine ships on order, compared with MSC’s 133, according to data. MSC’s CEO Soren Toft said in a statement that they continue to strengthen and modernize their fleet, offering us the scale we required for the most comprehensive ocean and short-sea transportation network in the market.
Maersk’s chief product officer for the ocean, John Sigsgaard said that as the alliance ends they won’t lose the ability to manage capacity because the business has evolved significantly since 2015. The Copenhagen-based company continues to be part of a smaller alliance providing it with all the flexibility it needs.
About 3 quarters of global container capacity is controlled by 9 carriers that are divided into 3 main alliances. The shipping sector – which benefits from antitrust exemptions in some countries – claims that their alliances help make efficient use of available space and keep freight costs low, but critics have expressed concerns that they stifle competition.