The 2M alliance, a capacity-sharing agreement that the companies formed in 2015, will stop in two years so the two can “pursue their individual strategies,” according to a joint statement from Maersk and MSC on Wednesday.
Maersk shares fell as much as 4.9% in Copenhagen after the announcement amid concerns the split may lead to renewed overcapacity and falling freight rates.
Bloomberg“What we need now is to focus on integrating our ocean operations with those on land,” Johan Sigsgaard, Maersk’s chief product officer for ocean, said by phone. “We’re taking back more control, which we need, especially on our backbone east-west trade lane from Asia.”
Maersk is transforming from a shipping line to a transport company handling almost the entire supply chain for its customers. Privately owned MSC, based in Geneva, has the industry’s largest order book for new ships and supplanted Maersk a year ago to become the No. 1 container carrier measured by total owned and chartered capacity.
In recent years, both Maersk and MSC have pursued growth in land-based transport and air freight 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 rates.
The 2M partnership has enabled the two shipping lines, which together control about one-third of the world’s container capacity, to divert customers’ cargo to each other’s vessels — akin to code-sharing deals between airlines. They formed the alliance to cut costs at a time when the industry was plagued by an overcapacity of vessels.Maersk currently has 29 new ships on order, compared with MSC’s 133, according to Alphaliner data.
“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,” MSC CEO Soren Toft said in a statement.
Sigsgaard said that Maersk won’t lose the ability to manage capacity as the alliance ends because the company has evolved significantly since 2015. The Copenhagen-based company also remains a member of a number of smaller alliances which fit better with the flexibility it needs, he said.
About three-quarters of global container capacity is controlled by nine carriers that are divided into three main alliances. The shipping industry — which benefits from antitrust exemptions in some countries — argues that their alliances help make efficient use of available space and keep freight rates down, but critics have raised concerns that they stifle competition.
“This will change the competitive dynamics on the major east-west trades for all major carriers, and clearly all carriers will take a close look at which threats and opportunities this will bring forth,” Lars Jensen, a container expert and the head of Vespucci Maritime, said in a LinkedIn post. “This should be seen as the first domino of many to fall over the next one to two years.”
In the European Union, the industry’s antitrust rule exemption is set to expire in 2024.
