Maersk and Hapag-Lloyd recently announced the creation of a groundbreaking long-term operational collaboration named the Gemini Cooperation. According to industry experts at Alphaliner, this move is poised to disrupt the current shipping alliance landscape.
Scheduled to commence operations in February 2025, the Gemini Cooperation seeks to establish a best-in-class global network characterized by superior schedule reliability, competitive transit times, and a reduced carbon footprint.
The collaboration involves the merger of the fleets of both companies, resulting in a formidable pool of approximately 290 vessels boasting a combined capacity of 3.4 million TEUs. Maersk will deploy 60% of these vessels, with Hapag-Lloyd contributing the remaining 40%. The ambitious target is to achieve above 90% schedule reliability once the network becomes fully operational.
The formation of the Gemini Cooperation has triggered Hapag-Lloyd’s early exit from THE Alliance at the end of January 2025, two years ahead of its originally scheduled conclusion in 2027. Similarly, Maersk and MSC Mediterranean Shipping Company have declared the conclusion of their 2M alliance in January 2025.
This strategic move has sent shockwaves through the shipping industry, prompting Alphaliner to highlight significant shifts. It signifies a departure from Maersk’s previous inclination to operate independently post the 2M partnership and marks Hapag-Lloyd’s exit from THE Alliance after eight years. Noteworthy is the introduction of a ‘hub and spoke’ network structure, limiting port calls on deep-sea loops.
The potential repercussions extend to THE Alliance, where the departure of Hapag-Lloyd could prompt changes. However, the remaining members, including NYK, Yang Ming, MOL, K-Line, and HMM, have limited options. THE Alliance might continue without Hapag-Lloyd, considering its global ranking, as ONE currently holds the leading position with 38.7% of capacity.
Hapag’s sudden exit from the THE Alliance prompted a swift response from its partners reaffirming their commitment to cooperation throughout 2024. The announcement, inclusive of Hapag, aimed to reassure customers amid escalating speculation about the future of THEA. However, despite attempts to allay concerns, THEA members did not guide on the alliance’s future beyond January. Also, Hapag-Lloyd, often considered the ‘lead line,’ doesn’t dominate tonnage provision, leaving Japanese carrier ONE with the lion’s share (Hapag-Lloyd provides 26.2%, followed by Yang Ming’s 17.6% and HMM with 17.5%). Nevertheless, the statistics are somewhat reversed when the partners’ committed share of their total fleet is considered, with Yang Ming at 77.5%, HMM at 69.7%, ONE at 67%, and Hapag-Lloyd at 41.3%.
The statistics paint a nuanced picture, with committed fleet shares altering the perception. As THEA members ONE, Yang Ming, and HMM deploy 2.3 million TEU, questions arise about their competitiveness against the Ocean Alliance. Taiwan’s Wan Hai emerges as a potential addition to the jilted THEA partners, given its existing collaboration with Hapag-Lloyd.
Another speculative scenario involves enticing an Ocean Alliance partner to join THEA. However, industry experts deem this unlikely due to the significant market share already held by THEA in Asia-Europe and transpacific trades.
Considering the recent upheaval caused by terror attacks in the Red Sea, it becomes evident that the shipping industry faces significant disruptions, compelling container lines to reroute services via the Cape of Good Hope due to the Suez Canal’s operational challenges. Simon Heaney (Senior Manager at Drewry Shipping Consultants) emphasized the vital role of alliances in enhancing operational efficiency and fostering healthy competition between ports.
Industry experts speculate that the Ocean Alliance, encompassing CMA CGM, Cosco, and Evergreen, may change as a result of the Gemini Cooperation. With Maersk controlling 14.6% of global container ship capacity, the alliance reshuffling has far-reaching implications. Johan Sigsgaard (Maersk’s Chief Product Officer) has expressed optimism about the Suez Canal returning to normalcy by February 2025. However, the companies remain open to alternative routes if needed.
While these changes pose challenges, they also open avenues for strategic reshuffling and the potential strengthening of alliances within the dynamic shipping industry.