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Leading Ocean Cargo Carriers Mull New Shipping Association for Standardization

After years of consolidation among global ocean container carriers, the six leading cargo shipping groups are said to be eyeing the formation of a new association.

The new global association would likely count standardizing industry practices among its key goals. According to reports from Shipping Watch, the new group would include Maersk Line, MSC, COSCO, CMA CGM, Hapag-Lloyd and ONE, with MSC’s Andre Simha leading the board.

The collaboration reportedly has a mission to develop best practices across the sector as new challenges and solutions are needed for issues plaguing the sector, like mandated lower-sulfur fuel levels and shifts in trade brought on by geopolitical conflict.

In recent years, the industry has struggled with overcapacity, which has resulted in some new alliances. Technology such as blockchain has also caused companies to develop new strategies and synergies.

ShippingWatch and an analysis from Supply Chain Dive said the initiative is likely to face scrutiny from customers and regulators, as have the operating alliances.

Michael A. Khouri, acting chairman of the Federal Maritime Commission (FMC), said testifying before Congress earlier this year, one positive trend, even with the wave of mergers and acquisitions and new carrier alliance groupings, is that “the individual ocean carriers within each alliance continue to independently and vigorously compete on pricing.”

Industry stakeholders have noted the alternative to carrier alliances is further consolidation in the sector with fewer ocean carriers and less competition, Khouri explained. The FMC responded to the recent and ongoing structural changes in the international liner shipping industry with aggressive negotiations on proposed agreements and enhanced monitoring programs.

“With the increased size and market share of carrier alliances over the last four years, the FMC has insisted on narrower authorities, more specific language and enhanced monitoring requirements,” Khouri said.