Thursday, December 15, 2016

Container Freight Shipping Lines Get Go Ahead for THE Alliance

US Approval for the Multination Box Carrying Association
Shipping News Feature
US – WORLDWIDE – The Federal Maritime Commission (FMC) has approved the new giant container shipping alliance, the ‘THE ‘Alliance, allowing it to become effective next week, on December 19. The Commission voted to allow the agreement between the five box freight carriers, Hapag-Lloyd, K Line, MOL, NYK, and Yang Ming, to become effective following a period of substantive and constructive discussion with the parties.

Attorneys acting on behalf of THE Alliance submitted the application to establish the agreement on November 4. The Commission made no Request for Additional Information, clearing the way for the agreement to come into force within the initial 45-day review period. Federal Maritime Commission Chairman Mario Cordero, said:

"I am very cognizant of the concerns industry stakeholders had regarding provisions in this agreement, particularly those related to information sharing and joint procurement. This office will continue to carefully focus on the impacts of the carrier alliance restructuring that is taking place in the shipping industry. Considerable review and analysis goes into assessing a final agreement before it is allowed to go into force and I am grateful for the hard work of Commission staff."

The scope of this agreement applies only to trade lanes between the United States and other nations. Cargo moved by carriers in the THE Alliance that does not originate or terminate in the United States is not covered by this agreement. Under the terms of the agreement, the members of the Alliance are permitted to share vessels, charter and exchange space on each other’s ships, and enter into cooperative working arrangements.

Last month the members of the THE Alliance announced their planned port rotation under the collaboration. With plans to deploy around 240 vessels on routes across the globe, the THE Alliance will claim approximately 14% of global market share, although the number was much higher when the collaboration was first announced with a potential 20+% share. Prior to its bankruptcy, Hanjin with its 2.9% share was set to join with its competitors to form the vessel sharing agreement (VSA) along with Hyundai Merchant Marine HMM), with its 2.2% share.

HMM of course is now scheduled to join the top two container shipping companies, Maersk Line and the Mediterranean Shipping Company (MSC), in its 2M network as we illustrated recently. The THE Alliance will see an increase when UASC merges with Hapag-Lloyd, as expected, next year, adding its 2.5% share as well as its capacity and vessels.

The Federal Maritime Commission is responsible for regulating America’s international ocean transportation for the benefit of exporters, importers, and the US consumer. The Commission’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.