2M, Ocean Alliance members dismiss need for bankruptcy protection

Dive Brief:

  • Orient Overseas Container Line (OCL) and Maersk Line told their respective alliances had no intention of providing a bankruptcy protection clause within their agreements.
  • A representative for OOCL's parent company spoke for the Ocean Alliance stating their clients know its partners — China Cosco Shipping, Evergreen Marine and CMA CGM — are financially healthy.
  • Similarly, reported a representative for Maersk Line said the 2M Alliance, which also includes MSC, "had no plans to implement a trust fund."

Dive Insight:

Carriers' financial health is a top concern for shippers, and even government agencies, ever since Hanjin Shipping's receivership forced thousands of shipments to be stranded since the shipping line could not pay to dock at ports or unload at terminals.

In fact, US Federal Maritime Commissioner William Doyle urged alliances earlier this month to create some sort of safeguard and ensure cargo is delivered, as promised, to customers. Yet, it appears as only THE Alliance followed the suggestion, establishing a mutual trust fund among its various members — Mitsui O.S.K. Line, NYK Line, K Line, Hapag-Lloyd, and Yang Ming Marine — to secure payment in case of bankruptcy.

THE Alliance sold the safeguard as a competitive advantage and a necessary component of customer service in a post-Hanjin world. But the other alliances' refusals paint THE Alliance in a different light: safeguards are only necessary when bankruptcy is a real concern. Given Evergreen Marine and Yang Ming's troubled history, THE Alliance may have seen itself forced to create a trust fund.

Regardless of the reason, it appears that for now THE Alliance will remain as the only maritime transport group with a bankruptcy safeguard, despite shipper concerns. 

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Filed Under: Freight
Top image credit: Flickr user 401(K) 2012