Wednesday, May 11, 2016

G6 Demise - UPDATED

It is widely expected that an announcement will be made this week that will reshape the face of container shipping world wide.

Hapag-Lloyd's Berlin Express (7506 TEU) arrives this afternoon on the G6 Alliance service.
The G6 Alliance, a major caller in Halifax, will have to be reorganized as member OOCL will be joining CMA CGM in a competing alliance. CMA CGM's earlier takeover of NOL'S container line APL means that APL will also be leaving the G6. In fact the EU regulators have specified that they must do so.

The Ocean Alliance of CMA CGM , the newly formed China COSCO, OOCL and Evergreen, will begin operation early next year. (CMA CGM currently calls in Halifax under the prevous alliance with UASC and CSCL.)

The remaining members of the G6 are Hapag-Lloyd, Hyundai (HMM), MOL and NYK. Left out of the CMA CGM lead Ocean Alliance, United Arab Shipping Company (UASC) will join the list of eight "orphan" lines, only some of which will be able to form a new alliance. The remaining orphans are Hanjin, Yang Ming and K-Line.

A number of shipping lines will be presenting a proposal for a new alliance to US regulators this week, and we will find out who will be working together.

There are fears that any lines left out of this newest alliance will be seriously compromised as rates continue to plummet and new, larger ships continue to be delivered.

It seems that the new, still unnamed, alliance will somehow include all eight orphans in one way or another. With Hapag-Lloyd as the largest and strongest member in the lead, it will incorporate the Japanese Nippon Yusen Kaisha (NYK), Mitsu OSK Lines (MOL) and Kawasaki Kaisen Kaisha (K-Line), the Korean Hanjin and Hyundai Merchant Marine (HMM) and Taiwanese Yang Ming (YM).
The eighth orphan, United Arab Shipping Co (UASC) is in independent talks about a merger with Hapag-Lloyd and will become a member of the new alliance either way.
The monstrous management details that will have to be worked out over the next 6 months or so will be a huge challenge, but the way it looks now is that the members will have to figure it out in order to survive.


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