The world’s two largest container shipping companies are ending a 10-year alliance in 2025, sounding the death knell for one of the three major ocean freight alliances.
MSC Mediterranean Shipping Company (MSC) and Maersk A/S, an entity under A.P. Moller-Maersk, have mutually agreed to terminate the 2M alliance, effective in January 2025.
The reasons for the breakup are scant, but both companies’ CEOs pointed to the evolving shipping environment in a joint statement.
“MSC and Maersk recognize that much has changed since the two companies signed the 10-year agreement in 2015,” said Vincent Clerc, the newly appointed CEO of A.P. Moller-Maersk and Soren Toft, CEO of MSC. “Discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies. We have very much appreciated the partnership and look forward to a continued strong collaboration throughout the remainder of the agreement period. We remain fully committed to delivering on the 2M alliance’s services to customers of MSC and Maersk.”
The announcement has no immediate impact on the services provided to customers using the 2M trades. Each company’s customer teams will communicate with their respective clients to support them through the phase-out of the 2M alliance.
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The 2M container shipping line vessel-sharing agreement (VSA) was introduced in 2015 by Maersk and MSC in an effort to ensure competitive and cost-efficient operations on the Asia-Europe, Transatlantic and Transpacific trades. The agreement has a minimum term of 10 years with a two-year notice period of termination.
ZIM Integrated Shipping Services is not a 2M member, but has a current partnership with the alliance to operate joint services on the Asia-U.S. East Coast and Asia-U.S. Gulf Coast trades.
2M is one of three major ocean freight alliances, which also include Ocean Alliance and THE Alliance. The Ocean Alliance consists of Cosco Shipping and subsidiary OOCL, Evergreen and CMA CGM, while Hapag-Lloyd, Ocean Network Express (ONE), HMM and Yang Ming comprise THE Alliance.
The 2M disintegration could potentially pave the road for future changes to vessel-sharing agreements—a critical tool in carriers’ playbooks for managing capacity.
Since the start of the Covid-19 pandemic, which proved to be incredibly profitable for the container shipping giants, MSC has taken a massive leap to becoming the world’s largest carrier. The Switzerland-based company leapfrogged Maersk in the past three years by seeing TEU capacity jump 22 percent from Jan. 1, 2020 to Jan. 1, 2023, according to data from shipping research tool and database Alphaliner. Maersk, now the world’s second-largest freight carrier, has seen capacity remain effectively flat over the past three years (up 0.6 percent).
As of Jan. 30, MSC has a capacity of 4.63 million 20-foot equivalent units (TEU)s, or 17.6 percent of total TEUs transported worldwide, Alphaliner said. Maersk is second-highest at 4.22 million TEUs, or 16.1 percent of containers.
MSC, Maersk accelerate growth
Both MSC and Maersk have continued to fortify their own networks via partnerships and acquisitions, expanding their roles in the ocean freight ecosystem and likely impacting their decision to rethink their own collaboration beyond 2025.
According to Alphaliner, MSC has acquired 271 secondhand ships since August 2020, with capacity of just over 1 million TEUs. MSC’s recent secondhand acquisitions exceed the entire capacity of HMM, the world’s eighth-largest carrier.
For the past six months, MSC has been busy widening its influence, entering into healthcare in a $4.5 billion joint-venture acquisition of South African hospital chain operator Mediclinic in August. One month later, the shipping giant teamed with Italian railway company FS Group to begin a joint project that would integrate the company’s sea and rail services in Italy and make intermodal transport in the country more efficient.
In response to high consumer demand, MSC then began to develop an air cargo service to complement its container shipping solutions.
In October, a subsidiary of MSC agreed to acquire Rimorchiatori Mediterranei S.p.A., an international towage operator active in Italy, Malta, Singapore, Malaysia, Norway, Greece and Colombia, for an undisclosed sum.
And to close out the year, MSC completed the acquisition of African transportation and logistics titan Bolloré Africa Logistics for a whopping $6.3 billion. Bolloré Group operates in 47 African countries with 16 container terminals and seven roll-on/roll-off terminals designed to carry wheeled cargo. In acquiring Bolloré, MSC gets access to a network of 85 maritime agencies that processed 7,100 port visits last year on behalf of the world’s largest shipping lines.
Finally, MSC has made more investments through another subsidiary—Terminal Investment Limited (TIL). TIL partnered with Tradepoint Atlantic to jointly develop a 165-acre container terminal with an on-dock rail facility at Coke Point, in the port of Baltimore, which would significantly expand container handling capacity in the state of Maryland.
TIL is committing another $800 million in partnership with Ports America to build a state-of-the-art container facility at the Port of New Orleans. Louisiana International Terminal (LIT) in St. Bernard Parish will be able to serve vessels of all sizes, dramatically increasing Louisiana’s import and export capacity and stimulating the creation of more than 17,000 new jobs statewide by 2050, the Port of NOLA estimates. At full build-out, LIT will be able to handle 2 million TEUs annually,
Maersk has been on a bit of an acquisition spree of its own since late 2021, expanding its global air network by scooping up air freight forwarder Senator International for $644 million. The firm then bought three e-commerce logistics firms: U.S.-based Visible Supply Chain Management, Netherlands-based B2C Europe Holding B.V. and Portugal’s fashion-oriented warehousing startup Huub.
In August 2022, Maersk completed its acquisition of Li & Fung Limited’s logistics arm, LF Logistics, for $3.6 billion. Following the deal, Maersk added 223 warehouses to its existing portfolio. Four months later, the shipping company acquired Martin Bencher Group, a Danish firm specializing in non-containerized project logistics, for $61 million.
2022 saw more warehouse expansion for Maersk across countries including Brazil, India, the U.K., Ireland, Germany, Denmark, Bangladesh and the Philippines. One of the company’s biggest undertakings came in the opening of a 560,000-square-foot Integrated Logistics Park in Pakistan in December.
The company also introduced a new rail-sea service connecting Asia to Europe through Central Asia, launched a dedicated coastal service in New Zealand and expanded its air cargo division to South Korea.
Most recently, in China, Maersk signed a land grant contract to build a green, smart flagship logistics center in the Shanghai Free Trade Zone. This marks the official entry of Maersk’s first logistics facility with low greenhouse gas (GHG) emissions in the country. The facility, which cost $174 million, is expected to be open for business by the third quarter of 2024.
‘Singular, unified’ Maersk to dissolve several brands
After the announcement of the 2M split, Maersk revealed it was moving toward a “singular, unified brand” with the discontinuation of the Hamburg Süd, Sealand and Twill company names, among other recently acquired brands currently under the Maersk umbrella including Senator and LF Logistics. These brands will be retired and integrated into Maersk.
“We believe that by integrating these into the Maersk brand, we will be able to ease your logistical difficulties, whilst also offering you more variety, ease, and connectivity than ever before, all under one roof,” the company wrote in a blog post. “At the same time, please rest assured that Maersk will continue to adhere and respect all contracts and agreements that are in place including contract confidentiality, so customers can be assured that your information continues to remain safe and secure.”
An in-depth review will be conducted before Maersk concludes on the future of each brand in different geographies. Each brand in different geographies will follow its own tailored timeline to transition towards the unified Maersk brand. These timelines are being finalized, and will be shared with each brand “as soon as they are available,” Maersk. Maersk said in an FAQ
The “goal is not to increase prices” and “some of our products and offerings may change,” Maersk said in an FAQ.
Beyond the need to simplify the complexity of operating multiple brands, the Denmark-based shipping giant also noted the importance of customer data in streamlining the overall business.
“Whilst we are now a company with increased presence across the transport and logistics supply chain, we must remember that one part of Maersk could be in a customer or supplier relationship with a third-party and another part of Maersk may compete with that same third-party,” Maersk said. “We must always ensure that third-party data that Maersk obtains from a customer or supplier relationship does not flow to another part of Maersk that competes against that third-party.”