European Ocean Carriers form new VSA

Citing a need to rationalize costs in a down economic climate, three European ocean carriers have announced a historically large vessel sharing agreement.  Maersk Line of Denmark, Swiss carrier Mediterranean Shipping Company (MSC) and French carrier CMA-CGM have announced three transpacific loops covering north and south Asia to the US west coast. 

The three strings of ships will use a total of 10 x 8000 TEU vessels on two loops and another 5 x 4000 TEU vessels on a third string.   The combined strings will move a massive total of 50,000 container loads a week.  Port rotations and vessel mix are highlighted in the graph below.

In better financial times, Maersk had resigned from other vessel sharing agreements after they purchased P&O Nedlloyd.   With a fleet bigger than any other carrier on the planet, Maersk figured they had the economy of scale that didn't require shared assets.   Now, with a weaker US dollar, consumer spending way down, and fuel at astronomical levels,  Maersk has been forced to consider a new economic model.  Meanwhile in the last several years both MSC and CMA-CGM have grown into powerful competitors with huge fleets of their own.  This new bundling of assets will stabilize capacity and allow the carriers to better weather difficult times.

Strange times make strange bedfellows.  I think the combinations and contractions on the ocean carrier front will continue for the foreseeable future.  I wouldn't be surprised to see this VSA combination become global.

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Comments

[The Legend]

Yes, very few lines own their own wheels and certainly they are not enough to match but with demand at peak times. Issue in states lines are tied into those long term lease chassis agreements with the equipment companies like Trac and Flexivan. To combat that shortage the chassis pool operators make a great sales pitch, but fall very short with expectations unfortunate the members of the pool don't see those short comings until they have committed their fleets into a pool.

Customer service is a real issue as well as equipment control. You know with all these innovations in the industry for tracking freight you would think that the inbound doc issue would have been streamlined already.

[Eric]

Dear "Legend", thanks for stopping by.

First, in all markets besides the US, the container chassis is provided by the trucker, not the ocean carrier. Carriers got stupid years ago (or at least Sea-Land) and started providing chassis in the USA.

Customer service in ocean shipping in the US has SUCKED for several years now. Spending 2 hours on the phone just trying to deal with inbound documentation is TYPICAL. Thats why so many people are using NVOCC's now.

Eric

[The Legend]

VSA in this case might lead to a takeover also. Unthinkable but very possible as this industry continues to shrink as proven by the exit of stand alone giants of Sea Land and P&O.

[Cheyenne Miranda]

Not only is the VSA interesting, but also the choice of partners. There was a day when Maersk considered itself "top tier" carrier in terms of scope and service level. Now the partnership with MSC and CMA-CGM, who traditionally have focused on cost vs. service selling, brings a European Mega-Carrier philosophy to the global trade lanes. Since Europe-Far East is the predominant trade, it will be interesting to see how deep the VSA goes...does it carry to the equipment rationalization level and the ever-so-valuable commodity of chassis, which CMA-CGM has been historically very weak is supplying. This latter of course is primarily a USA market issue.