OCEAN Alliance Details Planned Services

OCEAN Alliance – Evergreen, CMA CGM, OOCL, COSCO

The news out of Beijing at the end of last week on mp.weixin.qq.com is that the carriers of the OCEAN Alliance signed a document laying out the vessel sharing agreement’s planned network of services:

Members of the OCEAN Alliance, COSCO Container Lines, CMA CGM, Evergreen Line and Orient Overseas Container Line, today signed a document entitled the Day One Product, which sets out the proposed OCEAN Alliance’s network, including port rotation for each service loop.

The Day One network intends to deploy around 350 container vessels with an estimated total carrying capacity of 3.5million TEUs to provide one of the most comprehensive service coverage in the market on the following trade lanes. The vessel deployment details for each service loop, will be released around end of this November.

•    20 Transpacific services (estimated 160 port pairs, with 13 Asia – West Coast North America services, 7 Asia – East Coast North America and U.S. Gulf services)

•    6 Asia – Europe services (estimated 110 port pairs)

•    5 Asia – Mediterranean services (estimated 165 port pairs)

•    3 Transatlantic services (estimated 70 port pairs)

•    5 Asia – Middle East services (estimated 70 port pairs)

•    2 Asia – Red Sea services (estimated 35 port pairs)

A couple weeks ago the Federal Maritime Commission (FMC) approved the OCEAN Alliance for business, but did require some change from the alliance’s initial plan.

FMC Commissioner William P. Doyle laid out the terms and conditions the FMC required changed in the OCEAN Alliance’s initial vessel sharing agreement in a statement.

The biggest area of concern was that the agreement originally allowed COSCO, CMA CGM, Evergreen, and OOCL to negotiate jointly for third party services like tug services, barge services, bunker fuel suppliers, stevedoring services, etc, creating a risk of monopsony power over suppliers.

Monopsony is the flip of a monopoly, where instead of having one supplier manipulating the market, it is manipulated by one buyer unfairly affecting the pricing of services or products from multiple sellers.

Doyle’s statement is quoted in full on Marine Log, but here is a highlight, commenting on how the commission required changes in the OCEAN Alliance’s agreement to guard against monopsony:

 

… extensive changes were made to provisions that allowed for joint contracting and procurement. The final language of Articles 5.2(e) and 5.11 removed some joint contracting authorities entirely and limited the remaining authority to jointly contract for transshipment, barge/feeder services, bunker fuel, and facilities by stipulating that those could only occur outside the United States. Article 5.9 was also significantly altered to follow the framework established in the 2M Alliance Agreement (Maersk Line and Mediterranean Shipping Company (MSC). Under that framework, the Parties must negotiate independently and enter into separate contracts with port terminal facilities, marine terminal services (except where a terminal wants to negotiate with the Parties jointly), tug services, stevedoring services, and other services. On the operations side, though, the Parties can still jointly discuss and coordinate on matters such as port schedules, berthing windows, and other operational matters.

The United States’ FMC is not the only regulator to approve the OCEAN Alliance.

According to the weixin article quoted at the top of this blog, South Korea’s Ministry of Oceans and Fisheries have given approval, the OCEAN Alliance has finished its EU self-assessment compliance review, and the carriers have filed their alliance agreement to the Ministry of Transport (MOT) of the People’s Republic of China.

While the approval is still being waited for from China, it is very unlikely the MOT will halt the OCEAN Alliance.

All signs point to the services listed above beginning on April 1st, 2017 as planned.

The real question is what will happen with THE Alliance that was planned between  Hanjin, Hapag-Lloyd , Kawasaki Kisen Kaisha (“K” Line), Mitsui O.S.K. Lines (MOL), Nippon Yusen Kaisha (NYK) and Yang Ming.

Hanjin’s collapse and the newly announced plan of merger between “K” Line, MOL, and NYK makes it likely some major changes will happen with THE Alliance.

There is also speculation of change with the 2M Alliance, as differences in strategy between Maersk and Mediterranean Shipping Company (MSC) seem to be appearing. 2M had signed an agreement to discuss letting Hyundai Merchant Marine (HMM) join the alliance, but the addition now looks very unlikely.

As carriers always claim with their alliances, the new OCEAN Alliance prioritizes service quality and schedule reliability. The full list of OCEAN Alliance’s Day One Product Agreement’s planned services, including port stops, is listed below.

DAY ONE Product:

20 Transpacific services (with 13 Asia – West Coast North America services):

9 Pacific Southwest services:

PSW1: Fuqing-Nansha-Hong Kong-Yantian-Xiamen-LGB/LAX-Oakland-Fuqing

PSW2: Tianjin-Qingdao-Shanghai-PrinceRupert-LGB/LAX-Oakland-Tianjin

PSW3: (AWE3)-Port Kelang-Singapore-Jakarta-Laem Chabang-CaiMep-LGB/LAX-Oakland-Hong Kong-(AWE3)

PSW4: Lianyungang-Shanghai-Ningbo-LGB/LAX-Seattle- Lianyungang

PSW5: Qingdao-Shanghai-Ningbo-LGB/LAX-Oakland-Tokyo-Nagoya-Qingdao

PSW6: Kaohsiung-CaiMep-Chiwan-Hong Kong-Yantian-Kaohsiung-LGB/LAX- Kaohsiung

PSW7: Taipei-Xiamen-Shekou-Yantian-LGB/LAX-Oakland-Taipei

PSW8: Yantian-HongKong-Kaohsiung-Taipei-LGB/LAX-Oakland-Tacoma- Kaohsiung -Yantian

PSW9: Ningbo-Shanghai-Pusan-LGB/LAX-Pusan-Ningbo

 

4 Pacific Northwest services:

PNW1: Yantian-Xiamen-Ningbo-Shanghai-Pusan-Seattle-Vancouver-Yokohama-Yantian

PNW2: (AWE1)-Singapore-Cai Mep-Hong Kong –Yantian-Shanghai-Ningbo-Prince Rupert-Vancouver-Qingdao-(AWE1)

PNW3: Hong Kong-Yantian-Kaohsiung-Shanghai-Ningbo-Tacoma-Vancouver-Tokyo-Osaka-Qingdao-HongKong

PNW4: Chiwan-HongKong –Yantian-Kaohsiung-Vancouver-Seattle-Pusan-Kaohsiung-Chiwan

 

7 Asia – East Coast North America and U.S. Gulf services:

AWE1: (PNW2)-Qingdao-Ningbo-Shanghai-Pusan-New York-Boston-Norfolk-Singapore-(PNW2)

AWE2: Xiamen-Kaohsiung-HongKong-Yantian-Colon-New York-Baltimore-Norfolk-Xiamen

AWE3: (PSW3)-Hong Kong-Cai Mep-Singapore-Port Kelang-Colombo-Halifax-New York-Norfolk-Savannah-Port Kelang -(PSW3)

AWE4: Qingdao-Ningbo-Shanghai-Pusan-Colon-Savannah-Charleston-NewYork-Colon-Qingdao

AWE5: HongKong-Yantian-Ningbo-Shanghai-Colon-Norfolk-Savannah-Charleston-Hong Kong

AWE6: HongKong-Chiwan-Ningbo-Shanghai-Pusan-Houston-Mobile-Miami-Jacksonville-Singapore-HongKong

AWE7: Shanghai-Ningbo-Xiamen-Yantian-Houston-Mobile-Shanghai

 

6 Asia – Europe services:

NEU1: Shanghai-Ningbo-Xiamen-Yantian-SEA HUB-SUEZ Canal-Felixstowe-Rotterdam-BalticPort(s)（To be confirmed）-Felixstowe-SUEZ Canal-SEA HUB-Yantian-Shanghai

NEU2: Tianjin-Dalian-Qingdao-Shanghai-Ningbo-SEAHUB-SUEZ Canal-Rotterdam-Hamburg-Antwerp-SUEZCanal-Shanghai-Tianjin

NEU3: Ningbo-Shanghai-HongKong-Nansha-Shekou-SEA HUB-SUEZ Canal-Piraeus-Antwerp-Felixstowe-Hamburg-Rotterdam-Southampton*-Piraeus-SUEZCanal-SEA HUB-Hong Kong-Ningbo

NEU4: Tianjin-Pusan-Qingdao-Shanghai-Ningbo-Yantian-SEAHUB-SUEZ Canal-Tangier-Southampton-Dunkirk-Hamburg-Rotterdam-Zeebrugge-LeHavre-SUEZ Canal-Khor Fakkan-SEA HUB-Xiamen-Tianjin

NEU5: Shanghai-Ningbo-Yantian-Cai Mep-SEA HUB-SUEZ Canal-LeHavre-Rotterdam-Hamburg-Antwerp-LeHavre-Malta-SUEZ Canal-Jeddah-Nansha-Shanghai

NEU6: Kaohsiung-Ningbo-Shanghai-Taipei-Yantian-Colombo-SUEZCanal-Rotterdam-Felixstowe-Hamburg-Rotterdam-SUEZCanal-Colombo-Kaohsiung

 

5 Asia – Mediterranean services:

MED1: Qingdao-Shanghai-Ningbo-Kaohsiung-Hong Kong-Yantian-SEAHUB-SUEZ Canal-Piraeus-La Spezia-Genoa-Fos-Valencia-Piraeus -SUEZ Canal-Jeddah-Colombo-SEAHUB-Hong Kong-Qingdao

MED2: Qingdao-Pusan-Shanghai-Ningbo-Xiamen-Nansha-Yantian-SEAHUB-SUEZ Canal-Malta-Valencia-Barcelona-Fos-Genoa-Malta-Beirut-SUEZ Canal-Jebel Ali-SEA HUB-Xiamen-Qingdao

MED3: Pusan-Shanghai-Ningbo-Kaohsiung-Chiwan-SEA HUB-SUEZCanal-Port Said -Beirut-Iskenderun-Istanbul Evyap (Izmit)-Istanbul Ambarli(Avcilar)-Constanza-Odessa

-Istanbul Ambarli(Avcilar) -Piraeus -SUEZ Canal-SEA HUB-Pusan

MED4: Qingdao-Shanghai-Ningbo-Taipei-Yantian-Shekou-SEAHUB-SUEZ Canal-Ashdod-Haifa-Alexandria-Piraeus-SUEZ Canal-Jeddah-SEA HUB-Shekou-Kaohsiung-Qingdao

MED5: Shanghai-Ningbo-Pusan-Chiwan-SEA HUB-SUEZ Canal-Malta-Rijeka-Koper-Trieste-Venice-Koper -Malta-Damietta -SUEZ Canal-Jeddah-SEA HUB-Chiwan-Shanghai

3 Transatlantic services:

TAT1: Malta-Livorno-Genoa-Fos-Barcelona-Valencia-Lisbon-NewYork-Norfolk-Savannah-Miami-Algeciras-Valencia*-Malta

TAT2: Southampton-Antwerp-Rotterdam-Bremerhaven-Le Havre-NewYork-Norfolk-Savannah-Charleston-Southampton

TAT3: Le Havre-Antwerp-Rotterdam-Bremerhaven-Charleston-Savannah-Miami-Veracruz-Altamira-Houston-NewOrleans-Miami-Le Havre

5 Asia – Middle East services:

MEA1: Tianjin-Dalian -Pusan Shanghai -Ningbo-Chiwan-Singapore-KhorAl Fakkan-Jebel Ali-Bandar Abbas-Sohar -Port Kelang -Singapore –Shekou-Tianjin

MEA2: Qingdao-Shanghai-Ningbo-Chiwan-Singapore-JebelAli-Dammam-Jubail-Abu Dhabi-Singapore-Qingdao

MEA3: Lianyungang-Qingdao-Ningbo-HongKong –Shekou-Singapore-Jebel Ali-Bahrain-Dammam-Jubail-Port Kelang-Lianyungang

MEA4: Shanghai-Ningbo-Taipei-Shekou-Tanjung Pelepas-Colombo-JebelAli-Bandar Abbas-Port Kelang -LaemChabang*-Hong Kong-Shanghai

MEA5: Shanghai-Ningbo-Nansha-Singapore-Jebel Ali-AbuDhabi-Dammam-Singapore-Nansha-Shanghai

2 Asia – Red Sea services:

RES1: Shanghai-Ningbo-Taipei-Xiamen-Shekou-SEA HUB-Jeddah-Sokhna-Aqaba-Jeddah-SEAHUB-Shanghai

RES2: Shanghai-Ningbo-Chiwan-SEA HUB-Djibouti-Jeddah-Aqaba-PortSudan-Djibouti-SEA HUB-Shanghai