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Aug.8, 2016

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS 16 THE JOURNAL OF COMMERCE AUGUST 8.2016 By Greg Knowler GLOBAL FREIGHT FORWARDERS are accus- tomed to the frequently changing shape of the container shipping industry, but this year's overhaul of vessel-sharing alliances presents challenges even the most expe- rienced companies have not seen before. The July 14 announcement that Hyundai Merchant Marine is joining the 2M Alliance of Maersk Line and Mediterranean Shipping Co. effective next April has brought the issue of carrier management back to the top of the forwarder agenda. It raises many questions: What services will change? Will strings be cut, port calls omitted or schedules changed when the three new alliances start operating from April 2017? As an industry that survives on the narrow margins extracted from provid- ing services to shippers, even the world's biggest forwarders could use some clarity. This is the third consolidation wave of the last 30 years, according to Otto Schacht, executive vice president of global sea freight for Kuehne + Nagel International, and he has been through them all. "In the end, we man- age our volumes with 20 carriers or with 16 carriers," said Schacht, who previously worked for German carrier Hapag-Lloyd. "One week we may move more containers with Alliance A because a customer wants his shipment to arrive on a Wednesday, or we will use Alliance B to achieve the Wednesday arrival. "We will use all the alliances and carri- ers, and even if you have fewer carriers, the number of sailings will not really change very much," he said. "We are used to this. In the last five years, all the alliances have completely changed their schedules and put in strings or pulled them out on a regular basis." Four major container shipping alliances currently operate on the world's shipping lanes: the 2M, Ocean Three, CKYHE and G6. But with Beijing having merged its two biggest carriers — Cosco and China Ship- ping — and France's CMA CGM acquiring Singapore-based NOL and its liner unit APL, three of the alliances had to be broken up. So beginning next April, Hyundai will join Maersk and MSC in the 2M, while the recently formed Ocean Alliance will bring together the newly merged China Cosco Shipping, Evergreen Line, CMA CGM and Orient Overseas Container Line, and the THE Alliance will comprise Hanjin Shipping, MOL, NYK Line, "K" Line, Hapag- Lloyd and Yang Ming Line. The carriers hope to have a smooth roll- out of the two new alliances, but forwarders aren't so sure and are planning accordingly. "We are warning all our customers that when the reshuffling of alliances takes place next year, we will see some disruption from February to May," Schacht said. Another of the world's biggest forward- ers, Germany-based DB Schenker, also is considering the impact of the new alliances. Thomas Sorensen, DB Schenker's CEO of north and central China, said that, while it meant there were fewer alliances to choose from, the network was wider. "It limits our opportunities, and we have less horses to FORWARDERS BRACE FOR ALLIANCE PAIN Intermediaries anticipate months of cargo disruption after shuffling of VSAs next year

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