Eight of the world's 20 largest container carriers, of which several are facing severe financial difficulties, could be left behind if a new French-Chinese mega alliance headed by CMA CGM and Cosco is realized - an alliance that would radically alter the landscape in the hard-pressed container sector, projects Alphaliner on the basis of secret meetings currently being held in Shanghai and elsewhere. Meetings that were reported by ShippingWatch last week.
Alphaliner thus confirms the information that a new major and ambitious alliance between France's CMA CGM and Chinese Cosco - which are also trying to bring Taiwan's Evergreen and Orient Overseas Container Lines (OOCL) on board - would split up three of the four large-scale alliances currently in play on the key east-west trades between Asia and Europe.
The new French-Chinese constellation with Evergreen and OOCL would not only shake up the entire cooperation scenario among the 20 biggest container carriers, it would also leave behind eight container carriers which are currently part of the three alliances Ocean Three, CKYHE and G6.
The confidential meeting aimed at establishing a new alliance cooperation led by the French-Chinese constellation are estimated to be ongoing, though none of the parties have at this point officially confirmed the initiative.
The purpose of establishing the new CMA CGM, Cosco, Evergreen and OOCL alliance (CCEO) would be to challenge the biggest alliance on the east-west trade, Maersk Line and MSC's 2M partnership, while also securing some distance to the weaker carriers in the current alliances, as these could be facing acute and dire financial difficulties, for instance Korea's Hanjin and Hyundai Merchant Marine (HMM), notes Alphaliner.
Big losses in 2016
The close to all-time low market conditions in the past year, with extremely low rates and rock-bottom demand in the container sector, have carried into 2016, bringing bleak prospects for the rest of the year. Analysts project that the combined loss among the biggest listed carriers will reach USD 5 billion this year. The dark forecast includes a downgrade of container volumes and average freight rates, under added pressure from higher bunker prices, vessel idling and the transport of empty containers.