A shipping alliance between the world’s largest container lines had ended. This means there will be more opportunity, greater competition, and lower ocean shipping rates.
Maersk and MSC announced that they no longer plan to continue their 2M alliance. The alliance is due to expire in 2025. A vessel-sharing agreement was first launched in 2015 and caused a great deal of consolidation in the industry to occur as the two companies were better able to manage larger capacity through their partnership which enabled the pooling of cargo.
Federal regulators have scrutinized the 2M alliance due to their belief that anticompetitiveness issues were occurring but now the carriers have decided to end their long-standing agreement and will not embark on individual strategies. Maersk has now invested a large amount in its goal to expand beyond ocean shipping and become a leading end-to-end supply chain provider.
Many experts believe that the end of 2M is going to cause capacity shifts which will make other carriers start to evaluate their own alliances. In fact, many believe that soon there will no longer be any large shipping alliances.
Undoubtedly the end of the 2M is going to cause short-term changes that will impact price and capacity. There is going to be a great deal of competition between ocean carriers as many other companies start to evaluate their own alliances.
Lower prices could emerge as a result of the increased competition. Shippers are now going to need to choose between MSC, Maersk, or other carriers which means that war is going to erupt as shipping companies start to fight over the customers.
The increased competitive pressure will cause lower rates. However, the lower rates could lead to a volatile service and even more blank sailings.
The breakup of 3M is going to make Maersk a small player in the massive ocean industry. They will have only an operating capacity that is similar to other niche carriers. However, Maers has already started to position the company as a leading end-to-end supply chain provider and have started acquiring logistics firms that include both fulfillment and trucking.
MSC remains focused on ocean shopping and using expanding its capacity with new vessel orders. It is also raiding charter and second-hand markets. It is believed that the alliance was ended by MSC which is in a better position for the future. Maersk will need to step up its game in order to provide services that go beyond ocean shipping. It is unlike that the carrier will enter another ocean alliance due to the watchful eyes of regulators.
