The world’s number one and two shipping companies Mediterranean Shipping Company (MSC) and AP Moller-Maersk have announced that they will be ending their vessel sharing partnership in January 2025.
The partnership, which is popularly known as ‘2M alliance’ was introduced in 2015 to cope with a glut of ships and weak demand, and to ensure competitive and cost-efficient operations on main shipping routes from Asia to Europe, as well as across the Atlantic and Pacific oceans.
The agreement was signed at a time when the global ocean freight industry was struggling with low rates and overcapacity.
Both companies saw the alliance as a way to manage more capacity after purchasing new mega-ships. When the alliance was introduced, it had a minimum term of 10-years with a two-year notice period of termination.
Reasons for the break up
In a joint statement by Maersk and MSC said discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies.
“Today, we have a much different strategy, where we more look at how to integrate container shipping at sea with our land-based logistics business,” Maersk’s head of ocean shipping Johan Sigsgaard told Reuters in an interview.
“Operating our own network gives us more flexibility and allows us to connect our ships exactly where we want,” he added. MSC said in a statement that “we continue to strengthen and modernize our fleet, providing us with the scale we need for the most comprehensive ocean and short-sea shipping network in the market.”
Immediate outcome
According to shipping industry experts and analysts, the container shipping market could be set to see a price war as a result of the dissolution of the alliance.
Source – Daily Mirror