Friday, August 11, 2017

New Shipping Alliance Meets with Apathy from Container Carriers and Partners Alike

Cargo Sector Seemingly Unruffled by Largest Ever Grouping of Single Nationality Lines
Shipping News Feature
SOUTH KOREA – The agreement between fourteen of the country's leading shipping lines which came into effect this week has been more than a little lacklustre in both its presentation and reception. Whilst the cooperation, officially considerably more than a vessel sharing agreement, and to be known as the Korean Shipping Partnership (KSP), was unveiled by the Korean Shipowners's Association (KSA) principally as a major challenge to the established international container carriers, the agreement has been met with considerable cynicism by the ocean freight community at large.

At the announcement which was attended by representatives of the fourteen lines as well as Kim Young-Chun from the Ministry of Ocean Affairs and Fisheries, KSA Chairman Lee Yun-Jae said the agreement would establish a mutual cooperation basis for the development of the container liner industry, including the rationalisation of routes.

Industry analysts Alphaliner pointed out that all attempts in the past to forge deep cooperations' between any of the national rivals have been largely unsuccessful in a country with an industry which has previously proved to be deeply insular at a company level. This latest move is driven by the desire of the national government to protect what it sees as an essential sector in the light of the Hanjin collapse, something which shocked the local shipping world to the core.

Many in the country believe that that bankruptcy could have been avoided had there been more discussions between the failed company and its bankers and Hyundai Merchant Marine (HMM) representatives, which can be considered the most important body in the new partnership. Despite the intervention of government officials no support was available to Hanjin whilst HMM secured further finance.

The Ministry of Oceans and Fisheries has backed the KSP deal but again Alphaliner points out that the HMM + K2 Alliance which commenced in January and linked the Heung – A line and Sinokor Merchant Marine with the larger container shipping group, has resulted in under 1% of slot swaps for the selected intra-Asian market which the agreement refers to. The fragmented nature of the industry in the Republic, plus the fact that the lines remain bitter rivals on various other disparate trade lanes has led many in the industry to dismiss this partnership as insignificant. Certainly the major carriers on the routes the KSP has as a target seem unconcerned.

The partnership is just part of the Ministry’s vision for the future with policies on reinforcing sea borne logistics and the port sector and similarly upscale the country’s maritime presence around the globe in place. If, has been feared however, this governmental desire has resulted in pressures and incentives for the fourteen to display this cooperation which the commercial realities may well hinder.

Besides the three carriers mentioned above the other eleven are:

Dong Young Shipping; Hansung Line; Dong Jin Shipping; CK Line; Doowoo Shipping; KMTC; Namsung Shipping; Pan Continental Shipping; Pan Ocean; SM Line and TaiYoung Shipping.

The partnership covers much more than slot swaps, with agreements on the replacement of fleets, the formation of shared terminal agreements, rationalising routes and mutually agreed expansion of services and assets. A degree of cooperation that, were it to be suggested by any except a government ministry, would surely raise the usual antitrust concerns and complaints.

Whilst the ministry may express enthusiasm, the shipping lines’ attitude to the new deal can probably best be judged by their public reaction – not one of them to date has even mentioned the partnership on their own company websites.

Photo: The shipping line executives together with KSA and ministry officials at the agreement signing.