Container shipping sails into choppy waters

Maritime trade volumes reached 12,292 million tonnes in 2023, an increase of 2.4 per cent after contracting in 2022. "Global maritime trade outperformed expectations in 2023 due to easing pressures on the global economy and better-than-expected economic performance in large economies," says the 2024 Review of Maritime Transport by UNCTAD.

UNCTAD forecasts maritime trade volume to expand by two per cent in 2024 and containerised trade volume by 3.5 per cent. In the period 2025–2029, UNCTAD projects total seaborne trade to grow, on average, by 2.4 per cent and containerised trade by 2.7 per cent.

"Global maritime trade in terms of ton-miles (weight carried multiplied by the distance travelled) is estimated to have grown by 4.2 percent in 2023 due to shifts in trade patterns from the ongoing impacts of the war in Ukraine, the disruptions in the Red Sea and reduced water levels in the Panama Canal, all of which extended ship journeys and distances."

It is under these backdrops that key changes are being implemented by major carriers in alliances. 2M - the alliance of MSC Mediterranean Shipping Company and Maersk - have ended their 10 year partnership, and MSC is going alone (till now). Maersk has joined hands with Hapag-Lloyd to float Gemini Cooperation.

The other major alliances going operational now are the OCEAN Alliance including CMA-CGM, COSCO, OOCL and Evergreen and the Premier Alliance that will include HMM, ONE and Yang Ming.

Gemini model and the others
"We’ve developed an innovative hub & spoke system that is set to redefine ocean shipping," says Rolf Habben Jansen, CEO, Hapag-Lloyd.

"With around 340 vessels connecting the East and the West, this new network delivers significant improvements in reliability, connectivity, and sustainability.

"Our goal is ambitious yet clear: to achieve industry-leading reliability of over 90 percent once the network is fully phased-in. This is about meeting our customers’ most important need — dependability — and raising the quality standard across the industry.

"But Gemini isn’t just about better schedules. It’s about smarter, greener operations. By optimising routes, deploying larger vessels, and reducing idling times, we are not only saving time and resources for our customers but also advancing our decarbonisation efforts."

OCEAN Alliance partners have extended their deal by five additional years from 2027 till 2032. OCEAN Alliance covers the seven major East/West trades, connecting Asia to Northern Europe, the Mediterranean, the Middle East and the East and West coasts of North America, among other areas.

ONE announced the details of the inaugural sailings for Premier Alliance services across the Asia-Europe, Transpacific, and Asia-Middle East main trade lanes.

Premier Alliance and other carriers like ZIM have also announced cooperation with MSC on specific routes. For e.g., Premier will have slot exchanges with MSC in the Asia-Europe trade.

"The new slot exchange cooperation will involve nine services, and through this, ONE aims to offer more extensive direct port coverage with frequent sailings in the Asia - North Europe and Mediterranean trade lanes."

ZIM has signed a three-year agreement with MSC including slot swap and vessel sharing agreements. The cooperation scope includes six services with extensive connection between Asia to the US East Coast, West Coast of Mexico, Caribbean ports and US Gulf ports.

Kuehne+Nagel says during the transition period, "we anticipate that carrier schedule and service information for the affected trade lanes may become volatile and even more prone to errors than usual. Understanding these changes is crucial to anticipate potential delays and adjust your shipping strategies accordingly."

MSC leads in capacity
MSC has the maximum container capacity (20.3 percent) at 6.39 million TEUs as on February 1, 2025, according to data from Alphaliner.

Maersk follows with a market share of 14.2 percent (4.47 million TEUs) and CMA CGM is at the third position with a share of 12.3 percent (3.86 million TEUs).

Schedule reliability between 50-55% in 2024
In December 2024, global schedule reliability dropped by -0.9 percentage points M/M to 53.8 percent, according to the latest update from Sea-Intelligence.

"Throughout 2024, schedule reliability has largely remained within the 50-55 percent range. On a Y/Y level, schedule reliability was –3.0 percentage points lower in December 2024. The average delay for LATE vessel arrivals decreased by -0.23 days M/M to 5.28 days, which is the lowest that the delay figure has been since July 2024. On a Y/Y level, the December 2024 figure was -0.12 days lower."

Maersk was the most reliable top-13 carrier in December 2024 with schedule reliability of 60.4 percent. There were six carriers with schedule reliability of 50-60 percent.

Why reliability matters
During nearly eight years of operations of the old alliances (2M, Ocean and THE Alliance), the trends in schedule reliability have changed considerably. "That said, schedule reliability can be hard to contextualise over longer periods of time," according to Sea-Intelligence.

Sea-Intelligence created a composite score for each year the alliances have been in operation. "The way this score was calculated was as follows: for each trade lane that the alliances were operational in, we calculated how many months each alliance ranked 1st, 2nd or 3rd in terms of schedule reliability. These numbers were then multiplied by 3, 2 and 1 for 1st, 2nd, and 3rd, respectively.

"Overall, across the entire alliance life cycle of the alliance structure (2017-2024), 2M was the most consistent in terms of schedule reliability with the highest composite score. They were ranked 1st in 49 percent of the instances, and 2nd in 31 percent of the instances. Ocean Alliance was the next most reliable carrier alliance, having been 1st in 36 percent of the instances and 2nd in 39 percent of the instances. THE Alliance only managed to come out on top in 15% of the instances and was 2nd in 31% of the instances."

How will shipping rates move?
The billion dollar question - with geopolitical uncertainties not ending and carriers still going around the Cape of Good Hope and avoiding the Red Sea, shippers should be ready for another year of high and volatile rates.

The Gemini Cooperation ships will also be sailing via the Cape of Good Hope, Maersk said in an advisory.

June will be the first full month in which the network is fully phased in, with all vessels sailing on Gemini schedules.

The Drewry World Composite Index (WCI) declined two percent to $3,364 per 40ft container during the week to January 30, 2025, 68 percent below the previous pandemic peak of $10,377 in September 2021.

The Middle East ceasefire and Lunar New Year will see ocean container freight rates fall further in February - with carriers now taking action to slow the market decline, according to the latest update from Xeneta.

Latest data from Xeneta shows average spot rates from the Far East stand at $3,795 per FEU (40ft container) into North Europe and $5,085 per FEU into the Mediterranean – down 22 percent and 13 percent, respectively since January 1, 2025.

Early data suggests spot rates will fall further on February 1, down 5-10 percent on both trades. Ocean container carriers are now taking action to slow the market decline through capacity management, the update added.

Peter Sand, Chief Analyst, Xeneta says: "The situation is far from certain, and we know how suddenly and dramatically the outlook can change in ocean container shipping. There is still a long way to go before a lasting peace deal is agreed in the Middle East and other geo-political factors such as Trump’s tariff proposals could come into play and put upward pressure on freight rates."