G6 Alliance Passes Regulatory Review

By Mark Edward Nero

The Federal Maritime Commission said April 2 that it has concluded a comprehensive review of the proposed amendment to the G6 Alliance Agreement, clearing the way for the agreement to move forward this week as planned.

The agreement between American President Lines, Hapag Lloyd AG/USA, Hyundai Merchant Marine, Mitsui OSK Lines, Nippon Yusen Kaisha, and Orient Overseas Container Line expands the current geographic scope to allow G6 operational cooperation in the trades between the Far East and the US West Coast, and between North Europe and all US coasts.

The agreement authorizes the involved parties to charter and exchange space on one another’s vessels and to coordinate and cooperate transportation services and operations in order to improve efficiency and save costs.

The Commission’s unanimous decision allowed the agreement to become effective as scheduled on April 4.

The Commission said its decision was based on a determination that the agreement isn’t likely, via a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under the Shipping Act.

“The Commission’s action on the G6 Alliance is based on an extensive, competitive analysis conducted by the Commission’s staff and comments received by shippers and other industry participants,” Maritime Commission Chair Mario Cordero said, while maintaining that the Commission will continue to review the competitive impact of global alliances.

“This alliance will considerably increase available capacity in the expanded geographic scope, and has the potential to generate operational efficiencies and positive environmental benefits,” Cordero said.

The text of the agreement can be read at http://www2.fmc.gov/agreement_lib/012194-002-P.pdf.

Asian Shipping Lines Form Strategic Alliances

Five shipping lines, including Asia’s largest, announced Dec. 27 that they’ve formed an alliance to provide new weekly shipping routes around the world.

Evergreen Line, Hanjin Shipping, Kawasaki Kisen Kaisha and Yang Ming Line say they’re joining forces with Asia’s biggest shipping company, China Cosco, to offer 12 routes between Europe and the Mediterranean.

The cost and resource-sharing pact is expected to go forward during the second quarter of 2012. No West Coast lines are currently expected to be affected.

Last week, six Asia-based shipping lines revealed they’ve formed a pact to deploy new routes from the Far East; however, like this week’s newly-announced alliance, none of the routes is expected to involve the North American West Coast.

The so-called G6 Alliance, which would be among the largest such arrangements in the world, consists of APL, Hapag-Lloyd AG, Hyundai Merchant Marine, Mitsui OSK Lines, Nippon Yusen Kaisha and Orient Overseas Container Line.

The G6 says it expects to jointly deploy nine services from the Far East to northern Europe and the Mediterranean as a way to increase efficiency and become more competitive against industry giants like the world’s largest shipping company, Maersk Line.

“The nine joint services will offer more frequent departures with daily sailings and fast transit times,” the companies said in a Dec. 20 joint statement. “The schedule includes multiple weekly calls at Singapore, South China, Shanghai, Hong Kong, Rotterdam, Hamburg and Southampton.”

More than 90 ships are expected to cover over 40 ports starting in March or April of 2012, according to G6 member Hapag-Lloyd, and include deployment of the latest vessels with capacities of up to 14,000 TEU.

The new alliances come on the heels of another agreement forged earlier this month, when world’s second and third-largest shipping lines, Mediterranean Shipping and CMA-CGM, respectively, agreed to join forces on key global trade routes.

However, according to OOCL head of corporate planning Steven Ng, the G6 lines had been planning their alliance for some time, and its formation was not in response to the Mediterranean/CMA-CGM arrangement.