Brief

THE Alliance wins FMC approval

Dive Brief:

  • The Federal Maritime Commission (FMC) approved THE Alliance's vessel sharing agreement (VSA), effective Monday, according to a recent press release.
  • THE Alliance would combine the shipping capabilities of Hapag-Lloyd, Yang Ming and the recently merged Japanese container lines (K Line, MOL and NYK), for trade lanes traveling to and from the U.S. 
  • The agreement is set to launch mid-April, with 22 of the 31 services arriving at ports within the U.S. and Canada. THE Alliance must still receive approval from Chinese and European regulators.

Dive Insight:

THE Alliance is the last of three alliances to receive approval from the FMC. The Ocean Alliance was approved mid-October, and the 2M Alliance was approved October 2014.

All three alliances operate under similar VSAs wherein members can share vessels, charter or exchange ship space and enter into cooperative working agreements. Alliance members cannot, however, jointly contract services.

Regardless, the approval ensures April 2017 will mark a momentous landscape shift for the shipping industry. Together, the lines comprising the three alliances control 69% of the shipping industry's total capacity, according to figures from Alphaliner. Considering the purchases of Hamburg Sud and United Arab Shipping Company, the percentage increases to 74.4%.

The FMC has never denied a vessel sharing agreement, although it recognizes stakeholder concerns over industry consolidation. China, however, once denied a proposed VSA between Maersk, MSC and CMA CGM, causing the P3 Network's dissolution and the creation of the 2M Alliance that same year.

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Filed Under: Freight
Top image credit: Henry M Trotter