With a combined capacity of 3.4 million twenty-foot equivalent units (TEUs), the two shipping companies announced on Wednesday that Hapag-Lloyd and Maersk have signed an agreement for a new long-term collaboration that will begin in February 2025. In a joint statement, the companies stated that they have set an ambitious goal to ensure more than 90% schedule reliability once the network is completely integrated as part of the Gemini Cooperation agreement. Rolf Habben Jansen, CEO of Hapag-Lloyd, asserted that the company will gain from collaborative efforts to attain operational excellence and accelerate decarbonisation throughout the sector.
“Maersk and Hapag-Lloyd’s Alliance Deal: Strengthening Logistics and Reshaping Industry Dynamics”
According to Vincent Clerc, CEO of Maersk, the deal would strengthen the company’s integrated logistics portfolio and raise the calibre of its offerings. Maersk will provide 60% and Hapag-Lloyd 40% of the 290 boats from the world’s second and fifth-largest container ship operators that are part of the alliance’s shared pool. The agreement stated that Hapag-Lloyd will leave “The Alliance,” a shipping consortium, in January 2025. Hapag’s stock shot up 2.6% after the news, while Maersk’s saw a 1% increase.
“Post-Pandemic Shipping Dynamics: Lower Freight Rates and Middle East Tensions Impacting Routes”
Now that the pandemic-induced cargo boom has ended and vessel supply has exceeded demand, driving up freight prices, the industry has left the surviving boats with lower and more flexible freight rates. Ships have rerouted thousands of miles away from the Red Sea, where Houthi rebels in Yemen are attacking commercial vessels, due to the recent escalation of hostilities in the Middle East.
“Maersk and Hapag-Lloyd Suspend Red Sea Passage, Unveil Gemini Cooperation for Enhanced Efficiency”
Following an attack on its vessel Maersk Hangzhou on December 30, Maersk has barred its transit across the Red Sea and the Aden Gulf until further notice, even though Hapag-Lloyd had previously declared that it will avoid the Red Sea crossing. On Wednesday, they declared the signing of the Gemini Cooperation, a long-term contract designed to boost productivity by providing an adaptable and interconnected maritime network and supporting companies in their attempts to reduce their carbon footprint. With a combined pool capacity of 3.4 million containers, the deal will use about 290 boats, of which Maersk would contribute 60% and Hapag-Lloyd 40%.
“Maersk-Hapag-Lloyd Collaboration: Boosting Industry Reliability and Capacity”
Approximately 740 beds are available at Maersk, compared to 264 vessels at Hapag-Lloyd. According to Maersk CEO Vincent Clerc, this partnership would offer their customers a flexible maritime network, boosting industry dependability. After the network is fully implemented, both organisations hope to achieve more than 90% schedule dependability. Hapag-Lloyd will leave its current alliance, “The Alliance,” which consists of Yang Ming of Taiwan, Ocean Network Express of Singapore, and HMM of South Korea, in January 2025 as per the agreement.
“Shipping Industry Challenges: Record Profits to Job Cuts amid Freight Rate Downturn”
This agreement comes at a challenging moment for the marine sector. Large ocean carriers have been negatively impacted by the sharp decline in freight rates, notwithstanding the extraordinary profits made from the pandemic’s surge in demand for goods and cargo. The marine alliances, such as The Alliance and 2M, are making an effort to adjust to the changing dynamics of the sector. At the start of the year, Maersk revealed plans to cut over 10,000 jobs from its over 110,000 employees in an effort to save $600 million. The shipping giant had a 58% year-over-year decline in freight rates during the third quarter, and a 56% decline in revenue from its main shipping business to $7.9 billion.
The marine sector is confronted with challenges during the epidemic, such as overcapacity, shifting trading patterns, and a decline in cargo demand. By building an ocean network that is more connected and efficient, supporting the industry’s efforts to reduce carbon emissions, and offering clients dependable services, the Gemini Cooperation seeks to address these challenges.