Shipping alliances help container industry boost freight rates in coronavirus pandemic

Container shipping has sailed through the coronavirus pandemic largely unscathed, as ship-sharing alliances and supply curbs to bolster freight rates have helped operators to offset tepid trade demand. These new approaches to manage capacity will help the industry cope with the long-term challenge of overcapacity in the years ahead. In 2017, a fragmented container shipping sector fortuitously began to consolidate. This culminated in the creation of three key alliances encompassing more than 80% of the market. Heavyweights APM-Maersk and Mediterranean Shipping Company, or MSC, joined forces as part of the 2M pact. CMA CGM, Cosco and Evergreen formed Ocean Alliance, while another set of players including Hapag Lloyd, ONE and Yang Ming created THE alliance. When the pandemic started to hit global trade in March, these alliances were able to move quickly and decisively to reduce overcapacity and prevent a sharp drop in freight rates. Collectively, they have voided, or “blanked,” more than 400 sailings this year – removing 10% of nominal twenty-foot equivalent units (TEU) capacity from active service. Click for full-size infographic Proof of success can be seen in robust freight rates, which have defied the economic gloom. For example, the key North Asia-to-West Coast North America trans-Pacific… continue reading

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Source: CTRM Center

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