MSC Mediterranean Shipping Company (MSC) and Maersk have agreed to terminate their eight-year alliance known as 2M when it comes up for renewal in 2025. The move comes as the two largest container carriers have taken divergent strategies, and the 3 alliances (2M, Ocean Alliance and THE Alliance) that effectively control the container industry have come under repeated political criticism as freight rates – and carrier profits – soared over the past few years.
The 2M alliance was the first of the 3 alliances and initially came about as the container industry was plagued by overcapacity and seeking to build global networks. Despite initial reservations about how successful such an alliance could be, it is estimated the 3 alliances together now control as much as 90 percent of capacity on major shipping routes. According to the carriers involved, the goal of the alliances was to ensure competitive and cost-efficient operations on the major trade lanes – akin to code sharing deals between airlines. Whether by design or not, this also lead to smaller non-aligned carriers losing market share and having to offer more niche services to stay afloat.
News of the break-up has been received generally positively by cargo owners believing it will lead to more competition between the carriers and therefore better pricing options and ultimately, lower freight costs. Whilst 2025 may seem a long way off, it will take some time for these two shipping industry giants to de-tangle their operations which may lead to some short-term disruption and price volatility.
Now is therefore the ideal time for your business to ensure you have the right risk management strategy to safeguard your future financial position and avoid getting left behind by competitors.
ERA has both the expertise and resource in this area to help, as much as possible, future-proof your business against the challenges that lie ahead through:
- Global Market Benchmarking: use market-leading indices to benchmark your sea freight rates against the market and ensure price changes are in line with market developments.
- Cost & Service Transparency: ensure you have full transparency of all costs and surcharges incurred, to ensure price decreases in one service are not offset by increases in another.
- Up-To-Date Market Intelligence: as carriers pursue different strategies going forward, ERA will keep you up to date with all developments relevant to your business needs and priorities – both now and in the future.
- Shipping Optimisation: make sure all aspects of your shipping process are optimised, not just ocean-side costs, but also port charges, haulage, container utilisation, and even invoice payments.
Please feel free to get in touch if you would like more information and explore how ERA are helping businesses like yours navigate this sea change.