Copenhagen: A.P. Moller-Maersk A/S and Mediterranean Shipping Co., the world’s largest container lines, will end a partnership of pooling cargo on their vessels after a decade as their rivalry on land-based logistics intensifies.
The 2M alliance, a capacity-sharing agreement that the companies formed in 2015, will stop in two years so the two can “pursue their individual strategies,” according to a joint statement from Maersk and MSC on Wednesday.
“What we need now is to focus on integrating our ocean operations with those on land,” Johan Sigsgaard, Maersk’s chief product officer for ocean, said by phone. “We’re taking back more control, which we need, especially on our backbone east-west trade lane from Asia.”
Maersk is transforming from a shipping line to a transport company handling almost the entire supply chain for its customers. Privately owned MSC, based in Geneva, has the industry’s largest order book for new ships and supplanted Maersk a year ago to become the No. 1 container carrier measured by total owned and chartered capacity.
In recent years, both Maersk and MSC have pursued growth in land-based transport and air freight where profit margins for end-to-end services are higher. They have done so partly through a series of acquisitions, financed by record profits from booming container freight rates.
The 2M partnership has enabled the two shipping lines, which together control about one-third of the world’s container capacity, to divert customers’ cargo to each other’s vessels “- akin to code-sharing deals between airlines. They formed the alliance to cut costs at a time when the industry was plagued by an overcapacity of vessels.
Maersk shares fell as much as 4.5 per cent in Copenhagen after the announcement amid concerns that ending the partnership may lead to renewed overcapacity and falling freight rates.
Sigsgaard said that Maersk won’t lose the ability to manage capacity as the alliance ends because the company has evolved significantly since 2015. The Copenhagen-based company also remains a member of a number of smaller alliances which fit better with the flexibility it needs, he said.
