With the new shipping alliances controlling 97% of all traffic from Asia to Europe, they are just three points off a complete monopoly and pose a complete new challenge for shippers.
The Asia-North Europe trade is the only east-west route in which the three alliances — 2M, Ocean, and THE Alliance — will be operating exclusively with no competition from independent carriers, carving out shares of 34%, 33% and 30% respectively.
For multinationals, supermarkets and the very biggest shippers the new services could mean faster transits and lower rates as the alliances compete for their business.
The opposite may be true for smaller shippers and those shipping on other routes, who face being ignored unless their forwarder has the relationships and ability to negotiate directly with lines in each of the three alliances.
Altogether the new shipping alliances will control 97% of Asian-North Europe capacity, which means that it is more critical than ever that importers and exporters have effective representation to ensure they have access to the best rates and space guarantees.
With effective representation shippers have an opportunity to benefit from lower freight rates as the new shipping alliances add new capacity.
The Alliances have announced the first tranche of service enhancements and developments that will have a direct impact on operations and transit times and which need to be factored into your supply chain planning.
From April 1 there is one more weekly service for shippers to choose from as the number of loops increase to 17 in April, bringing the number back to the same level as seen in April 2016.
Matching loading and discharge ports has become more interesting, with 113 port pairs monopolised across the three Alliances.
Faster, longer and new route options provide a significant opportunity to overhaul supply chain operations and the opportunity to flex transit times to suit your order book.
Shippers will have a total of 372 direct port pair options in the westbound leg to North Europe, with 113 of those port pairs (approximately 30% of the total) unique to one alliance, potentially reducing pricing pressure on these port pairs.
While some ports, like the Baltic States and Scandinavia are not well covered, North Europe ports like Rotterdam are doing better, with no reduction in port calls and faster transit times.
The Port Pair and route situation is fluid, with more detail expected from 2M in particular
Faster and longer route options
Of the direct routes that the OCEAN and THE alliance now offer, 60% on the Asia-Europe trade routes will have a faster transit time, saving three or more days.
The alliances have dropped some ports from their services, which is one of the key reasons for these shorter transit times.
Over a third of the routes offered by the OCEAN and THE alliance members will be offering much shorter or longer transit options, which means that smart shippers have the capability to shorten cash to cash cycles or increase inventory time on the water to save warehouse costs.
Options will become more transparent as the new services settle in and more schedules are made available.
New route options
The three alliances are dropping 380 and adding 300 direct routes, many with new port pairings, on the main Asia-Europe, trans-Atlantic, and trans-Pacific trades.
The new ports are spread across the three alliances and member carriers and will appear in their schedules, in due course.
The short-term challenge is identifying the available services from specific ports, by each alliance.
Services are potentially available through each of the carriers in the alliance, which means that as the carriers and alliances add new ports, their direct port pairs and transshipment options will grow as well, improving speed and reliability.
We can work with you to review all new services, transit times, vessel operators, and performance to plan and optimise your supply chain. EMAIL us now