2M Alliance to “break up”? MSC’s latest shipbuilding plan threatens Maersk!
Søren Toft, CEO of MSC, said recently that fleet size is not a target, but the truth is that the company is achieving the largest capacity for new buildings ever. This forces the industry to guess if one day the 2M Alliance “breaks up”, can MSC be able to stand on its own while operating independently?
“Growth, profitability, and customer service satisfaction are what drives MSC forward, and we will continue to introduce new services and solutions to support our customers in order to remain competitive,” Søren Toft said. But MSC is privately owned by the Aponte family, which almost never discloses key financial figures for the company. According to Alphaliner, MSC has a historic new build program that shows 126 new container ships on order with a combined capacity of nearly 1.8 million TEU. These orders represent 38.8% of MSC’s existing capacity. Industry analysts said the strategy could pose a “threat” to the stability of Maersk and the 2M Alliance. In the container market, on the one hand, major market players are competing in end-to-end logistics, acquiring port terminals and air freight capacity, and relying on the digitization of freight processes. On the other hand, some shipping companies have received only a little attention, but there may be a major change in the next few years, namely the 2M Alliance.
Jensen said that by the end of 2024 MSC’s total fleet capacity will be roughly equivalent to the total capacity in 2015 when MSC and Maersk formed the original 2M Alliance. This could be a signal that MSC is preparing to operate as an independent carrier in major ocean trade, as they will have a large enough fleet. If MSC leaves the 2M Alliance, it will make operational compromises for a shipping company that has operational autonomy for the world’s largest container line, rather than a larger ship-sharing alliance. If MSC leaves the alliance, Maersk will lose its alliance partner, which will cause several major problems for itself. From another aspect, it is also a game between MSC and Maersk in another dimension. This also poses a potential threat to Maersk’s entire integrated logistics strategy.
Since changing its strategy in 2016, Maersk has moved away from the gas and oil business by choosing to focus on containers, logistics, and port terminals, and has been making major acquisitions in the logistics space. Non-alliance operators are losing advantage and now account for only 14.8% of total market capacity. The largest alliance is 2M with a 35.9% share in 2021. Throughout 2021, MSC has been most active in buying available tonnage and ordering new ships, while Maersk has taken a more defensive approach to maintain capacity. In addition, the current drop in market demand has reduced fleet utilization on container routes, leading to a partial normalization of spot rates on major trade routes. Demand in the container shipping market is in rapid decline after hitting record highs since the summer of 2021, which is affecting the utilization of companies’ original busy vessels.
