New Business Alliances Could Give Shipping Industry a Facelift

Worldwide shipping could see drastic changes in the coming year. Alliances between major players in the industry could lead to a shift in the way goods are moved around the world. Supertankers that can haul up to 18,000 might become the priority, hopefully increasing efficiency and allowing companies that form alliances to see higher profits. But there are some concerns about how major alliances will alter the industry as a whole.

There is much at stake in places like the Port of Long Beach which is projected to generate $160 million in revenue this year and saw cargo volume increase by 11.3% last year. Efficiency has played a major role in that trend, and it will be interesting to see if new alliances between shipping companies impacts the port.

“The eyes of the nation are on this port complex,” said U.S. Federal Maritime Commission Chairman Mario Cordero.

“If we allow these alliances, there may be some winners, and some may not be able to maximize their businesses,” he also added, after failing to answer questions about whether or not his agency would approve specific alliances.

New alliances will not just influence U.S. ports, but the entire world. In June, Danish carrier A.P. Moller-Maersk Group proposed an alliance with Geneva-based Mediterranean Shipping Co. It represents a whopping 37% of the movement of containers around the world.

In China, two major state-owned shipping powers agreed to a strategic alliance in which they would work together in an effort to “improve the influence of Chinese shipping companies in the world shipping industry.” Cosco Pacific Ltd. and China Shipping Terminal Development combined to invest more than $318 million for a major stake in Asian Container Terminal Holdings Ltd.

“We remain open to any cooperative moves with China Shipping in the future,” noted Guo Huawei, board secretary of Cosco’s listed shipping unit.

Richard Wei, head of Asia Transportation at the investment bank USB said, “It is becoming more difficult for China Shipping to operate on international trade lanes without some sort of alliance partnership.”

The first known couriers sent messages and packages in Egypt some 4,000 years ago. Now, in 2014 and pushing into the future, shipping is a vital part of the global marketplace and major corporations are finding that working together will help them succeed in the ultra-competitive industry.


Leave a Reply

Your email address will not be published. Required fields are marked *