Subscribe to our free, weekly email newsletter!


Two largest ocean cargo carriers form 2M Network

By Patrick Burnson, Executive Editor
July 10, 2014

When the P3 Network was nixed by China last month, mega ocean cargo carriers were facing a vexing dilemma: how to reorganize global services and still make money. Two of the world’s biggest –  Maersk Line and Mediterranean Shipping Co – may have solved that problem by creating the 2M Network today. But where does that leave CMA-CGM? Free to explore other options, it would seem.

Maersk and MSC have signed a 10-year contract deal to share vessels on some of the world’s busiest trade routes.

Apart from being a smaller market share agreement, it also differs from the P3 Network by being a pure-play VSA. There will be no jointly-owned independent entity with executional powers.

“Vessel-sharing arrangements are nothing new, but they have gotten larger due to the sustained over capacity situation,” says Brian M. Conrad, Executive Administrator, Transpacific Stabilization Agreement (TSA). “Carriers ordered vessels based on assumptions of a quicker recovery in global trade growth, and on the urgent need to manage costs through greater economies of scale. Roughly a third of global container lines posted profits in 2013, most from cost-cutting, not top line growth.”

In the transpacific, adds Conrad, no major carrier operated profitably and the trade as a whole has seen only five profitable quarters in the past five years.

The VSA will include 185 vessels with an estimated capacity of 2.1 million TEU, deployed on 21 strings. The overall purpose of the cooperation is to share infrastructure (network).

According to Maersk, shippers will have more stable and frequent services reaching more ports with direct service. At the same time, the VSA should improve the efficiency of the Maersk Line and MSC networks through better utilization of vessel capacity and economies of scale.

“Our agreement with MSC is a step towards achieving all of these objectives in the East-West trades,” says Søren Skou, Maersk Line CEO.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

LM Group News Editor Jeff Berman caught up with UPS Freight President Jack Holmes at the National Shippers Strategic Transportation Council’s (NASSTRAC) Annual Conference and Exhibition. Berman and Holmes spoke about various aspects of the less-than-truckload sector (LTL), as well as related freight transportation news and trends.

In the third-party logistics (3PL) sector, the ongoing trend of merger and acquisition (M&A) activity never seems to take a break. That is apparent in recent weeks alone, with XPO Logistics recent acquisition of Norbert Dentressangle for $3.53 billion, Echo Global Logistics scooping up Command Transportation for $420 million, and Kuehne+Nagel buying ReTrans for an undisclosed sum.

During this webcast attendees will learn about technology that is delivering real-time tracking on freight and putting an end to the all too common question of “Where’s My Brokered Load?”. Whether you’re a broker, 3PL, shipper, or carrier, find out how you can gain automated, TMS-integrated visibility on all your shipments.

FedEx recently took another step in its plans to acquire Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which it announced in early April. The company said it has “submitted the required filing to the European Commission to obtain regulatory clearance in connection with the intended recommended public cash offer all issued and outstanding ordinary shares in the capital of TNT Express.”

The American Trucking Associations last week praised Senator Deb Fischer (R-Neb.) for her bill that takes some positive steps towards alleviating the current environment regarding the truck driver shortage.

Article Topics

News · Ocean Cargo · Container · Shipping · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA