A part of Watch Media

ShippingWatchFriday3 February 2023

  • Search
  • Log in
  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Search
  • Log in
  • Latest
  • Search
  • Log in
  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Offshore
  • Ports
18/02/2014at 15:11

SeaIntel: Chinese collaboration changes nature of alliances

The new collaboration between Cosco and CSCL is just one step toward a merger, says Lars Jensen, CEO of SeaIntel, who predicts that this could change the nature of container carrier alliances significantly.
BY KATRINE GRØNVALD RAUN

The collaboration between Chinese shipping companies Cosco and China Shipping Container Lines could ultimately usher in a completely new development for the major container carriers, says partner and CEO of SeaIntel, describing the recently announced cooperation between the two carriers as "very interesting."

SeaIntel has for several years pointed to the two parties as obvious candidates for a merger that could create the necessary consolidation in the market. And this does not create an insignificant player, as a merger between the two companies would result in an entity on par with CMA CGM, effectively becoming the fourth largest container carrier in the world.

Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

However, this collaboration does not yet constitute a merger, though it could very well be an option, Lars Jensen tells ShippingWatch.

"This represents a solid step toward becoming one big unit, and I think that's ultimately where they want to go," he says, stressing that he is speaking exclusively from his own knowledge of the container market, and not the companies' activities in other shipping segments, such as bulk.

"But in terms of container, it makes a lot sense to establish a closer cooperation. There is nothing specific yet about how the collaboration will be formed, but it's important to keep in mind that Cosco is part of the CKYH alliance, while China Shipping is not part of either alliances," he says, referring to G6.

P3 starts out with 130 ships, compared to G6's 180

As such, this collaboration could alter the entire alliance structure for container carriers, says Lars Jensen. First of all, the creation of P3 alliance has raised doubts about the stability of the current alliances, G6 and CKYH, which will have a hard time matching the P3 alliance. And SeaIntel has been saying for a long time that a large-scale overhaul of the entire alliance structure would make sense. A change that might have been set in motion now:

"Of course this is going to take time. But it's worth noting that P3 is a ten-year agreement, while the G6 upgrade - recently submitted to authorities in the US - is a two-year deal. If we're not mistaken, CKYH is an old alliance, so the carrier can withdraw from that in a period of some six months," explains Lars Jensen.

 

He says that the fact that the G6 agreement only runs two years indicates that the members have been unable to agree on sticking together for a longer period than that. Already one year from now the members will have to decide amongst themselves whether they want to continue the partnership or pursue something else.

"And the collaboration between Cosco and CSCL adds further weight to this development. This must send Cosco thinking about whether to stay in CKYH, or if the carrier should work with China Shipping, and possible other partners, to establish something new. And this also has to make the other partners in CKYH think about what to do if Cosco pulls out. This is a clear sign of the instability that's already present," says Lars Jensen.

Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

However, there is no doubt that the increased cooperation serves as lifeline for the two Chinese container carriers, who have been struggling financially for a long time. Another interesting question in terms of the new collaborative agreement deals with China Shipping Container Lines and United Arab Shipping Company (UASC) -  who together have ordered half a series of five 18-19,000 teu container ships each. Does the increased cooperation between the two Chinese carriers also include UASC? Or how will these ship orders be dealt with?

"That brings us back to the fact that this pushes a lot of the uncertainty that's already present in the market," says Lars Jensen:

"This is not going to happen tomorrow or the day after that, but if look ahead two years, there is certainly a realistic chance that both CKYH and G6 will no longer exist as we know them today, that instead we'll have a complete different alliance structure."

Cosco and CSCL in large-scale collaboration 

New G6 alliance agreement will only apply till 2016 

Related articles:

  • Cosco and CSCL in large-scale collaboration

    For subscribers

  • New G6 alliance agreement will only apply till 2016

  • P3 alliance divides US interests

Sign up for our newsletter

Stay ahead of development by receiving our newsletter on the latest sector knowledge.

!
Newsletter terms

Front page now

Foto: Staff/Reuters/Ritzau Scanpix
Logistics

DSV sees one advantage of downturn: It will be cheaper to buy competitors

Acquisitions are decisive for growth at logistics group DSV, and with prospects of declining freight volumes, the prices of acquisitions will fall. DSV will use this to its advantage, according to CEO Jens Bjørn Andersen.
  • DSV books a much improved 2022 result – but a new reality now awaits
  • DSV aims to grow further via acquisitions with market consolidation still very far away

For subscribers

Hans Lind Dollerup er ny managing director for Dan-Bunkerings europæiske forretning. Selskabet har også hyret en ny kommerciel direktør i Europa. | Foto: Dan-Bunkering
Suppliers

Dan-Bunkering hires new management for Europe

For subscribers

Foto: Rebecca Naden/Reuters/Ritzau Scanpix
Tanker

Euronav retains substantial dividend due to merger strife

For subscribers

Foto: A.p. Møller – Mærsk, Verity/pr
Logistics

Maersk deploys drones in US inventories

For subscribers

Foto: Zhang Ke/AP/Ritzau Scanpix
Offshore

There aren't enough ships to install giant wind turbines across Asia

For subscribers

Genrebillede. | Foto: Lee Jae Won/Reuters/Ritzau Scanpix
Logistics

Expeditors hit by claim from robot company after extensive cyberattack

For subscribers

Further reading

Foto: A.p. Møller – Mærsk, Verity/pr
Logistics

Maersk deploys drones in US inventories

The Danish shipping giant is testing the use of drones at the company’s US inventories in an attempt to improve warehouse inventory systems.

For subscribers

Genrebillede. | Foto: Lee Jae Won/Reuters/Ritzau Scanpix
Logistics

Expeditors hit by claim from robot company after extensive cyberattack

US-based Expeditors is facing claim from a customer citing business difficulties resulting from the freight forwarder’s paralysis caused by a cyberattack a year ago.

For subscribers

Foto: DSV
Logistics

DSV books a much improved 2022 result – but a new reality now awaits

Danish logistics firm DSV delivered strong top and bottom line progress last year, but the company is setting the stage for a very different 2023.

For subscribers

Latest news

  • Maersk deploys drones in US inventories – 2 Feb
  • Expeditors hit by claim from robot company after extensive cyberattack – 2 Feb
  • DSV sees one advantage of downturn: It will be cheaper to buy competitors – 2 Feb
  • Euronav retains substantial dividend due to merger strife – 2 Feb
  • Dan-Bunkering hires new management for Europe – 2 Feb
  • Mærsk Center for Zero Carbon hires new executive from port company – 2 Feb
  • Stolt-Nielsen expects good times ahead for chemical tanker after new profit – 2 Feb
  • There aren't enough ships to install giant wind turbines across Asia – 2 Feb
  • Creditors in crisis-stricken Dof request bankruptcy proceedings – 2 Feb
  • DSV books a much improved 2022 result – but a new reality now awaits – 2 Feb
See all

Jobs

  • Senior Lead, Human Sustainability at Sea

  • Foundation Package Manager - Offshore wind industry

  • Financial Controller for International Shipping Company

  • Senior Financial Controller

  • Junior Finance Business Partner - offshore wind industry

  • Chartering Manager for Lauritzen Bulkers A/S

  • Fleet Manager

  • Copenhagen Shipping Company is hiring a skilled cargo broker

Jobs

  • Senior Lead, Human Sustainability at Sea

  • Foundation Package Manager - Offshore wind industry

  • Financial Controller for International Shipping Company

  • Senior Financial Controller

  • Junior Finance Business Partner - offshore wind industry

  • Chartering Manager for Lauritzen Bulkers A/S

  • Fleet Manager

  • Copenhagen Shipping Company is hiring a skilled cargo broker

See all jobs

Colophon

ShippingWatch
Search

Sections

  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Offshore
  • Ports
  • Sitemap
  • RSS feeds

Editor

Tomas Kristiansen

tk@shippingwatch.dk

Tel.: +45 3330 8360

Editor-in-chief

Anders Heering

Publisher

JP/Politiken Media Group Ltd

Advertising

annoncering@infowatch.dk

Tel.: +45 7077 7445

Advertising

Job Advertising

job@infowatch.dk

Tel.: +45 7077 7445

Jobs

Subscription

Try ShippingWatch or get an offer for a subscription meeting the exact needs of you or your company.

shippingwatch@infowatch.dk

Tel.: +45 7077 7445

Learn more about subscriptions here

Address

ShippingWatch

Rådhuspladsen 37

1785 Copenhagen K, Denmark

Tel.: +45 3330 8360

Guidelines

  • Privacy Policy

Copyright © ShippingWatch — All rights reserved

Microsoft is in the process of discontinuing Internet Explorer – and so are we.
For a better experience, we recommend using one of the following browsers.

Kind regards,
ShippingWatch

Google ChromeMozilla FirefoxMicrosoft Edge