ACL and H-L call it splits

 The fallout from the Maersk / Hapag-Lloyd "Gemini Cooperation" began earlier this year. As soon as the arrangement was announced H-L stated that they would be leaving THE Alliance effective early 2025. There was some fear that that the other partners, ONE, HMM and Yang Ming would not be able to survive the loss, but it has now been reported that MSC has stepped in. As the world's largest container line MSC can bring considerable stability to THE Alliance. (MSC had been party to the 2M Alliance with Maersk which will also expire). It is still possible that various lines will re-form into different arrangements, but it is now much less likely.

Atlantic Container Line has announced that it is withdrawing from the longstanding "reciprocal space charter and sailing agreement" with Hapag-Lloyd. Initially established in 1986 and renewed every ten years, the agreement saw ACL moving some of its ships to H-L's Montreal route for a time and even renaming them with "Express" names.

The G3 (third generation) ACL ship Atlantic Companion was renamed Companion Express from 1987 to 1994.

 There was lots of Hapag-Lloyd orange on deck as Atlantic Cartier arrived in Haifax and also on the Atlantic Compass:

Atlantic Concert carried the name Concert Express from 1987-1994.

In recent years H-L boxes (and the green United Arab Shipping Co's UASC boxes) have been fewer and fewer on ACL ships (at least from what can be seen on deck), so it is uncertain how severe a jolt this latest development will be for the Grimaldi-owned ACL. There is also talk that H-L may establish a new transatlantic service of its own calling in Saint John, NB. H-L and CP Rail (now CPKC) also have longstanding ties, so this may be a loss to Halifax which is served only by CN Rail.

 Maersk and Hapag-Lloyd will be establising feeder services as part of of their new network but ACL also has feeders to Gothenborg and between Liverpool and Dublin and Belfast. The shakeup may have more ramifications however, but that is purely speculation at this point.

You can play "Where's Waldo" trying to spot the Hapag-Lloyd and UASC containers on the Atlantic Sky at PSA Fairview Cove yesterday, September 20. 

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More Fallout

 I seem to have missed a news item from mid-January, that was not widely reported (nor apparently announced officially). It is that the Mediterranean Shipping company MSC, the world's largest container line, - will be investing in the PSA Halifax operations, by taking a minority equity position. PSA Halifax operates both the Fairview Cove and South End Container Terminals in Halifax, and MSC is currently the major customer at the latter facility, which they call PSA Halifax, Atlantic Hub.

Whether this investment has anything to do with the recently announced Maersk / Hapag-Lloyd joint venture called Gemini Cooperation (to take effect a year from now) is not known. The aim of that new scheme includes a high degree of reliability and on time performance which may be encouraging other lines to do the same.

 MSC currently has five lines running through Halifax (although not all lines call here on every trip). It is also rumoured that MSC may be reducing the number of calls in some of the other Canadian ports  - namely Saint John, Corner Brook and Montreal.

That may happen, according to some sources, when the current rail expansion is completed in the South End Terminal later this year. That project, which will expand in-terminal trackage from 8,000 feet to 14,000 feet, is well underway with new buildings, and new container storage areas under construction. Work has now started on the rail lines. Some new equipment will also be acquired to serve the new track, such as rubber tired gantries (RTGs) to replace the current diesel units with larger, electric ones. 

It also appears that at least one, if not both of the new Super Post Panamax container cranes that were delivered in November 2023, are now in service. (Both are shown in the photo above.)

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MSC Weser - here for a time

 The Mediterranean Shipping Company has four scheduled routes that call at eastern Canadian ports, and I hear there will be a fifth added soon. The four present routes all have Montreal as the terminal port, and only the Canada Express 1 and Canada Express 2 service have scheduled calls in Halifax. Those calls were initially lightering/top off calls because of St.Lawrence River draft restrictions, but now have become "paying" as local cargo is handled as well as train/truck express cargo.

Today's arrival of MSC Weser is not a regular call since MSC's Canada Gulf Bridge service from Montreal to the Gulf of Mexico normally calls in Corner Brook and Saint John, NB southbound, but not Halifax. Instead MSC Weser is northbound, after sailing from Altamira (August 19), Progresso (August 24), Freeport (August 29) and Philadelphia (September 2).

After working cargo today the ship will move to a layup pier. Its scheduled arrival in Montreal has been changed from September 13 to October 9 for some reason  (likely a blanked sailing due to the Labour Day holiday weekend), so the ship will be here for a while.

Built in 2001 by Kvaerner Warnow Werft in Warnemunde to a CV2500 standard design, it is a 26,106 gt, 33,691 dwt vessel with a capacity of 2524 TEU including 400 reefers. It also carries three 40 tonne capacity cranes. Although it was launched as Wehr Weser it was delivered as Libra New York and carried that name until 2009 when it became Weher Weser again. It became MSC Weser in 2016.

The fifth MSC service, is believed to be the Indus 2, running from northwest India with calls in Italy and Portugal to the US east coast. Details have not been announced officially, but is expected to bring a significant amount of cargo to Halifax. MSC also operates the Indus Express and Indusa services all from Mundra with various ports of call en route to the USA. The three services are also known as the IPAK US services.

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Latest merger - WHERE WILL IT END

The latest mega deal in the container shipping business is another stunner.

The Chinese state shipping company COSCO Shipping Holdings Co Ltd  has bid $6.3 bn to acquire OOIL (Orient Overseas International Ltd) owners of OOCL (Orient Overseas Container Line). 70% controlled by the Tung family, OOCL was a leader in many areas of the industry but a relatively small player compared to the giants. However its acquisition by COSCO vaults COSCO into third largest line after Maersk and MSC and ahead of CMA CGM.

The last (ever?) OOCL ship to call in Halifax, OOCL Kuala Lumpur was winding up the old G6 Alliance service. OOCL was not included in a new group called THE Alliance.

But it is not over yet! A 24% owner of CMA CGM, the Yildrim family, is tendering its shares (through a Chinese bank) and it is expected that COSCO will snap them up. Should that be the case they will become the world's second largest container line.  There is speculation by the experts that indeed COSCO's goal is to take over top spot from Maersk.

Paying a bewildering 31.1% over market value of OOCL shows that COSCO is not playing on the same playing field as private industry. Surely someone has to put a halt to this.

OOCL to be part of COSCO 

CMA CGM, (including APL) soon to be part of COSCO

Maersk then to be  #2 ?

Lets hope the various national regulators have the guts that tiny South Africa did recently when it condemned the much less contentious Japanese K-Line, MOL, NYK alliance. That Alliance will not be able to call in South Africa as a result, even though other nations' regulators approved or turned a blind eye to it.

Regulators should find a way to put a halt to either the OOCL buy or the CMA CGM buy. As it is now there is barely enough competition (even though with historically low rates, lines are still competing, but hurting in the process). 

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Halifax container look ahead

Container business in Halifax is down, but that is as a result of the current national and world economies. All the lines are still calling here, but are scrambling hard for more business or more economies in operation. .  

The world's two largest lines have overbuilt and capacity exceeds demand. In order to achieve more efficiencies, they have come up with a plan. A.P.Moller (Maersk) and MSC (Mediterranean Shipping Co) have managed to convince regulators in Europe, China and the US that a ten-year VSA (Vessel Sharing Agreement) is not a merger, a monopoly, or a threat to other operators. Therefore it will come into effect in January, involving 185 ships on 21 strings on Asia-Europe, Trans-Pacific, and Trans-Atlantic routes. There will be five strings on the Trans-Atlantic alone.
Known as the 2M it replaces the P3 which had included CMA CGM, but which was rejected by China earlier this year. One difference is that the P3 would have had joint management, and was deemed to be an effective merger, at least by China. The new 2M is supposed to have only a small coordinating office, with both Maersk and MSC operating independently. How this will actually work is a mystery, since the lines use different terminals in most ports and have somewhat incompatible practices.

Halifax appears to be fairly immune to direct impact from this new VSA, but there may be fall out.

Maersk Pembroke arriving this morning from Montreal is one of four Maersk and one CMA CGM ships on the TA-4 service.

Maersk has let it be known that their TA-4 (Transatlantic 4) service from North Europe to Montreal, Halifax and return, will remain, and not be included in the VSA. However it is possible that the bumping of mid-size ships may result in different ships on the TA-4. Maersk has a sharing arrangement with CMA CGM, which  provides one ship on the five ship rotation.

The 22 knot MSC Kyoto at speed on the St.Lawrence in 2013.

Built in 1981 as Lexa Maersk it was lengthened in 1984, then sold to Costamare and renamed Maersk Tokyo in 1997 and MSC Kyoto in 2007. It was scrapped in July of this year. 

It operated on MSC's Caribbean service.

MSC does not call in Halifax, but has two services to Montreal. SLSC1 (jointly with HAPAG-Lloyd and OOCL) and an independent service from Montreal to the Caribbean that calls in Saint John.
They will not be effected likely because their ships have a high ice class and were built for the route, altough MSC has been known to put odd ships on the run.

 OOCL Belgium was built for the St.Lawrence service.

As was Montreal Express - they operate year round.

MSC has also announced that its North Europe/Boston/Philadelphia service will be maintained outside the 2M VSA. The 2M's Trans-Atlantic service will concentrate on New York and ports farther south.

Halifax Express is one of the ships on the G6 Alliance service to Halifax that will compete head to head with the 2M.

There are numerous other VSAs and pooling arrangements between shipping lines, notably the G6 Alliance which calls in Halifax and includes HAPAG-Lloyd, OOCL, APL, MOL, NYK and Hyundai. That agreement ends in 2016. It has also announced a winter ship reduction for its Asia-US West Coast and Asia-US East Coast (including Halifax) services. That is as a result of week trading, and will see some 16 ships laid up or reassigned.

One possible ray of sunlight is the immense backlog of ships in Los Angeles/Long Beach port due to logistics delays on land, brought on by larger ships. Many of the ships delayed are ones we see in Halifax, so shippers may decide to re-route their cargoes.

Another point of future interest is the embryonic Canada Europe Trade Agreement (CETA) that still must be ratified by EU countries. If adopted as is, it will allow European shipping lines to trade between Canadain ports. Maersk's TA-4 would then be able to transport empties from Montreal to Halifax (which they are not allowed to do now) and even some cargo or make it a feeder service. MSC could do the same between Montreal and Saint John.

A well loaded Zim Tarragona sails on misty October 29, carrying numerous HAPAG-Lloyd boxes

 
Left out of all the above is the notable exception of ZIM. It is the only major not included in any of these VSAs and alliances (altough it does have slot charter arrangements). Whether this will be to the line's advantage or disadvantage is hard to tell. Some say it will benefit them. As they enter a new era after financial restructuring, they are expected to order larger ships (they are already chartering in larger ships that call in Halifax). Working from their hub in Kingston, Jamaica, it is possible they will be able to compete even on trans-Atlantic work, which they abandoned years ago. Unfortunately ZIM has been targeted by protestors in the US due to its association with the state of Israel. In recent weeks ZIM ships have been delayed in Oakland, CA, and Tampa, FL, by demonstrations against Israel's recent actions in Palestine.

Amoing other factors that will bear on Halifax in the coming months:
- the new Panamax canal and its larger size limits (which will be exceeded by improvements to the Suez Canal)
- fuel surcharges on containers to compensate for the new low sulphur content regulations that come in to effect in January.  
- pressure for improved port efficiency. With some Asian ports moving 120 containers per ship per hour, major US ports in the 80-85 range, Halifax's and Montreal's 51 seems slow. However the number of cranes per ship in some of those ports is twice what we offer.Halterm has already added new cranes this year and Fairvew is expecting some next year, but the giant ships that would justify more cranes are not on the horizon. Productivity in our case would be to ensure that ships get out of port in 8 hours, without overtime charges.

One big ship and seven cranes would certainly show vastly more moves per hour per ship than Halifax could produce. One mid-size ship with three cranes or maybe four would be about our limit, but usually it is only two.

Cerescorp's two large cranes work the largest sizes of ships that come to Halifax. Its smaller cranes don't have the height or reach to work the big ships fully.

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P-3 -One Step Closer, and HAPAG merges

Faced with a large over-capacity in container ships and the resulting depressed state of container shipping in general,  the world's three largest container lines Maersk (15% of trade), MSC (13%) and CMA/CGM (8%) decided last year to pool their ships into one service called the P3 Network. Longstanding competitors, the three lines desperately need to lower costs to survive, since they have ordered so many giant (but efficient) ships, with not enough cargo to carry. By inference of course they also want to drive smaller operators, with smaller (and less efficient) ships out of the market too.

To keep regulators happy the P-3 stated that they would still run their businesses independently, but only pool the ships. So far US regulators have approved the proposal, but only as it applies to US ports. China and the EU have yet to weigh in. The latter has a 30% market share cap on shipping consortia, which the P-3 likely exceeds. In fact it is nearly a 40% share, which would effectively be a monopoly by many definitions.

Three separate trade routes are involved: Asia-Europe (via Suez), Trans-Pacific and Trans-Atlantic. With the US approval it seems likely that changes will be made on the Atlantic before the full service comes into play sometime mid-year. This may well effect Halifax and Montreal.

Maersk currently serves Halifax and Montreal with a direct transatlantic service. The latter port is  inaccessible to the giant Maersk ships, but Halifax is.

Maersk Pembroke is one of the Maersk ships that serves Montreal westbound and Halifax eastbound on a weekly transatlantic service.

CMA/CGM did serve Halifax with its own ships, but has been using slots on Maersk ships for more than a year. (see photo above)

MSC Kyoto on the St.Lawrence last summer.

MSC operates a feeder service from Montreal and Saint John, NB to the Dominican Republic, which connects with other MSC world services.

Are bigger ships on the way for Halifax? Certainly the two container terminals are ready for larger ships, but will they come?

If they do, will they bite into the trans Atlantic services of other lines?

My guess:
ACL (Atlantic Container Line) - no, because the line carries significant RoRo cargo, and largely serves northern Europe.

Post-panama, US flag, APL Belgium leaving Halifax March 23, runs on the G6 Alliance service.

 G6 Alliance - maybe, even though G6 members HAPAG-Lloyd and APL use a significant number of post-Panamax ships they are still less efficient than the new P3 giants

Zim Tarragona at3500 TEU is considered to be a small and inefficient ship.

Zim - maybe, because they use smaller ships, which are considered to be inefficient in today's terms. The Port of Halifax's largest container customer has been in a vulnerable position for some time.

Several lesser players such as Nirint and Melfi - probably not since the call in Halifax en route southern Europe to Cuba.

Ottawa Express on the St.Lawrence last summer.

Meanwhile HAPAG-Lloyd has come one step closer to sealing its deal with the Chilean CSAV, wherein CSAV would become HAPAG's largest shareholder. The merger (some would say takeover of HAPAG) will also include financing for seven new 9300 TEU ships-not exactly the formula one would expect if they are trying to reduce capacity. It will however see the disposal or transfer of smaller ships.
The merger would also see HAPAG + CSAV become the fourth largest container line, edging ahead of CMA/CGM.

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The shape of things to come?

1. Santa Carolina outbound, on course to pass east of George's Island.

A strange container ship in at Fairview Cove today: Santa Carolina, German flag, built in 2000 and with a capacity of 3430 TEU. The ship is fitted with four 45 tonne cranes, indicating that it is a feeder type ship, perhaps trading to smaller ports.

The unusual part is that she was carrying almost exclusively MSC (Mediterranean Shipping Company) containers. MSC is not a regular caller in Halifax. They did call here during the Montreal lockout in the summer, but that was a temporary arrangement. Their ships pass here on the way to and from Montreal going to/from their Caribbean hub in Freeport, Bahamas, so it would make sense to drop in from time to time.

Perhaps they have decided to come here more often.

MSC Freedom cleans up at Fairview Cove

MSC Freedom arrived this morning, apparently in ballast and spent all day loading up on MSC containers left here or delivered here during the Montreal port lock-out.

As with many MSC ships she is not a new vessel! In fact she was built in 1980 for Sea-Land Service Inc,. as one of their revolutionary diesel powered D-9 class container ships, Sea-Land Freedom. With the rapid expansion of trans-Pacific container trade, the ship was lengthened 30 meters in 1985 and now measures 32,629 gross tons. Her bridge deck was also raised at the time to maintain the mandated view over the bow. This explains the unusual"gap" under the wheelhouse. With the lengthening, she became a D-9J (J for jumboized.) It is hard to imagine now that at the time she was among the biggest and fastest container ships in the world. Her single Sulzer engine propelled the ship at better than 22 knots. Her container capacity of 2472 TEU is now considered modest. This is further reduced on the St.Lawrence trade, due to draft restrictions.

Maersk acquired Sea-Land and ran the ship, with the name unchanged, until 2007 when it became MSC Freedom. It now sails under the Marshal Islands flag, but is owned in Greece.

Traces of Maersk blue paint can still be seen on her hull where the black top coat has worn off.

In the photo above she is seen emerging from the fog in the Narrows early this morning, with the tug Point Chebucto alongside. Atlantic Oak is out of the picture, but also assisted in the docking. On departure early this evening, Point Chebucto was bow tug and Atlantic Oak was stern tethered escort.