Revolutionizing Global Shipping Alliances: Impact on Ports and Trade Routes
Singapore’s ports poised to benefit from the restructuring of major shipping alliances
In a groundbreaking move, Denmark’s Maersk and Swiss-run MSC, two of the world’s largest container shipping lines, have announced the dissolution of their existing alliance in February 2025. This strategic decision aims to form new partnerships with other liners to enhance service coverage and reduce costs. Maersk will forge the Gemini Cooperation with German liner Hapag-Lloyd, focusing on shipping between Asia and the United States, with a commitment to deliver "above 90 per cent schedule reliability" on the route. On the other hand, MSC will operate independently.
The Rise of New Shipping Alliances
Meanwhile, Taiwan’s Yang Ming, South Korea’s HMM, and Singapore-headquartered Ocean Network Express are set to establish the new Premier Alliance to operate in key East to West routes. These shipping alliances play a crucial role in enabling liners to pool their vessels and share port facilities along specific trade routes, ultimately reducing costs and expanding service coverage and customer base.
Reshaping Global Shipping Dynamics
The restructuring of global shipping alliances will not only reshape the dynamics for liners and ports but also redefine shipping routes and strengthen connectivity via Singapore. The anticipated increase in the number of services via Singapore will provide more routing options and connectivity to shippers, enhancing the global supply chain.
Benefits for Customers
Ms. Trine Nielsen, global head of ocean freight at logistics management firm Flexport, emphasized that the restructuring of shipping networks by the Gemini and Premier alliances will ensure profitability for liners while benefiting their customers, including those in Singapore. By optimizing efficiency and meeting demand, the changes in shipping networks are expected to improve service reliability, potentially speeding up delivery times, and making shipping more affordable for customers.
Anticipated Rise in Traffic
The anticipated rise in traffic comes at a time when Singapore is already handling significantly higher container volumes. More ships are rerouting around the Cape of Good Hope in South Africa to avoid the Red Sea, resulting in off-schedule arrivals in Singapore and increased utilization of the port as a transshipment hub.
Impact on Singapore’s Ports
Singapore’s ports moved a record total of 27.43 million twenty-foot containers in the first eight months of the year, marking a 6.4 per cent increase compared to the same period in 2023, according to data from the Maritime and Port Authority of Singapore (MPA). The rise in traffic led to congestion at local ports earlier in 2024, prompting measures to reduce waiting times to no more than two days to alleviate delays in goods delivery.
Analysis and Implications
The restructuring of global shipping alliances has far-reaching implications for the maritime industry, trade routes, and port operations. By enhancing service reliability, optimizing efficiency, and meeting customer demand, the changes are set to benefit both liners and customers, ultimately leading to a more streamlined and cost-effective shipping process. The anticipated rise in traffic via Singapore underscores the port’s strategic importance as a key hub in the global supply chain, facilitating trade and connectivity across regions. As shipping rates are expected to soften and delivery times improve, businesses and consumers can look forward to a more efficient and affordable shipping experience in the near future.