Two largest ocean cargo carriers form 2M Network

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

By ·

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

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 [email protected]

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!

Article Topics

Container · Ocean Cargo · Shipping · All Topics
Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....