As SCDigest reported in late January, the two largest ocean container ocean container carriers behind the so-named 2M alliance - Maersk Line and Mediterranean Shipping Co. (MSC) announced plans to end their collaboration in 2025. (See Maersk Line and MSC Alliance coming to an End.)

Supply Chain Digest Says...   Drewry also notes that this 2M split marks a significant change to the consensus view not long ago view that the future of container shipping will involve dominating alliances.     What do you say?   Click here to send us your comments       Click here to see reader feedback

After 2M was formed in 2015, it led to a mad dash for other carriers to organize to share capacity and hopefully reduce operating cost, with different groups of carriers forming the Ocean Alliance and THE Alliance.

A joint statement from the two carriers noted that “MSC and Maersk recognize that much has changed since the two companies signed the 10-year agreement in 2015. Discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies.”

That sums up the split nicely, but the maritime analysts at Drewry sat down after the announcement with executives at Maersk for a little more explanation of why the divorce proceedings now.

First though, Drewry notes that “There will be no marriage counselling, no reconciliation. Instead, both companies will be free as birds to pursue their own ambitions and strategies, unencumbered by a disgruntled partner.”

The Maersk executives told Drewry that the company has for some time been anxious to get out of 2M, viewing it as incompatible with the new integrator strategy announced in late 2018. The lack of autonomy on its network decisions was holding back progress of the masterplan, the execs said.

That strategy involves proving end-to-end logistics services to move freight by sea, air and land, with complementary distribution and last mile delivery services. Meanwhile, MSC’s strategy appears to be focused on gaining share of container freight.

2M “worked for Maersk in 2015 as the company had many new big ships that it needed help filling, but as the focus has shifted from scale economies towards end-to-end solutions, the company wants to accelerate the strategic vision,” Drewy observes, add that “To do that, it needs to control its own network and have full ownership of service performance and reliability. It is done with compromises” that come with being in an alliance.

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As a result, Drewry believes that Maersk will not seek membership of an existing alliance or try to form a new one. Maersk is confident that its integrator model will be more attractive to customers and deliver higher returns for shareholders - and that developing a core independent liner backbone will be an essential element of this. The likely result, Drewry says, is that Maersk will lose some frequency of sailings, if not actual port coverage, but expects that increased control will give higher reliability and visibility that will create value for customers.

But is Maersk’s strategy a good one?

No says Tim Power, Drewry’s managing director. He believes “won’t work” and that it will not deliver superior logistics value to customers versus the offer provided by a conventional mix of liner and forwarder/logistics providers, and will not generate higher margins and returns than those achieved by conventional lines.

The main challenge Drewry sees is that container shipping and logistics have very different operational and commercial imperatives, with the latter demanding a level of customer-orientated service not provided in the liner market.

Synching operations of various firms that Maersk has or might acquire will be another huge challenge in delivering the vision, Drewry says.

The plan “will also need buy-in from customers who might be wary of entrusting their entire supply chain to a single partner, especially one new to the role,” Drewry also notes. Drewry adds that such a service might appeal to shippers that have neither the resource or knowledge to build their own supply chain network and would like it handled by a one-stop-shop.

However, Drewry notes, whether you like Maersk’s strategy or not, “being an integrator within an alliance is unworkable.”

Drewry also notes that this 2M split marks a significant change to the consensus view not long ago view that the future of container shipping will involve dominating alliances.

“Instead, it seems increasingly likely that the big-hitters will pursue single life, with the medium size operators remaining together out of necessity,” Drewry concludes.

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