Global News MSC, Maersk to end 2M Alliance amid divergent strategies on ocean capacity

Mediterranean Shipping Co. and Maersk will terminate their 10-year 2M Alliance in January 2025 as the carriers “pursue individual strategies” and focus on integrated networks, they announced Wednesday.

The carriers will wind down the alliance over the next two years, unravelling a complex partnership stretching across all major trade lanes. While Maersk in recent years has focused on investment in integrated offerings and held off on expanding its fleet, MSC has done the opposite to become the largest container line by tonnage. Based on the current orderbook, MSC is set to dwarf the other major carriers in terms of tonnage.

The 2M carriers operate 30 loops and strings on the major trade lanes, according to Maersk.

“It is a big alliance to wind down, and I am happy that we are making this decision two years out, because ending the 2M network will be a complex undertaking,” Johan Sigsgaard, executive vice president of Maersk, told the Journal of Commerce on Wednesday.

A. P. Møller-Maersk CEO Vincent Clerc and MSC CEO Søren Toft said in a joint statement that discontinuing the 2M Alliance “paves the way for both companies to continue to pursue their individual strategies.”

The individual strategies being pursued by the carriers revolve around controlling their own ocean, land, and air networks. MSC has the largest fleet in the world as well as a significant orderbook, and has been developing its inland network, logistic offerings, and last year launched its MSC Air Cargo division.

But MSC’s approach is nowhere near as aggressive as Maersk. The enormous profitability amassed by Maersk over the past three years drove the carrier to accelerate its integrated strategy with a series of targeted acquisitions across the globe, including a move into air cargo with the $644 million takeover of air freight forwarder Senator International.

“Our strategy now is very different, and we are in a very different place to where we were back in 2015 when we formed this alliance with MSC,” Sigsgaard said. “We didn’t have an integrated strategy, and at the same time, we were all facing the arrival of ships of 20,000-plus TEU, so having the alliances was a good tool to make sure the ships were fully utilized.”

Sigsgaard said the carrier’s executives have concluded that a standalone Maersk network will put the company in a more advantageous position for the coming years, hinging on control of cargo across its end-to-end logistics.

“We have come to a point in our integrated strategy where we have a much stronger connection between the ocean and land-based network,” he said. “We need an ocean network that has critical connection points where we have control and can provide agility and flexibility to customers when demand goes up and down quickly.” Questions about future alliance moves Still, the announcement also raises questions whether Maersk and MSC will seek new alliance partners, potentially setting off another round of so-called musical chairs involving the other two networks, THE Alliance and the Ocean Alliance. Given MSC’s existing tonnage and robust orderbook, some in the industry have questioned whether the carrier could go it alone and not tie up in any alliance.

Antonella Teodoro, senior consultant at British transport economists MDS Transmodal, said after the announcement that the pending dissolution of the 2M Alliance did not come as a surprise.

“Since 2020, we have been monitoring the rapid increase in the capacity operated by Maersk and MSC alone,” she said. “We have also noticed there is an increasing number of services that are operated for 90 percent or more by the two lines alone.

“However, based on their current scheduled capacity, it would appear that this decision not to extend 2M beyond 2025 does not mean ending collaborations with other lines — cross alliances services appear to remain important part of their offering.”

Starting in the third quarter, MSC and particularly Maersk have increasingly operated services without the other. In the fourth quarter of 2022, more than one-third of Maersk's capacity was independent of the alliance, compared to 21 percent in Q4 2021, according to MDS Transmodal.

Maersk currently has 40 to 50 vessel service agreements (VSAs) outside the 2M Alliance and many of those will continue, Sigsgaard said.

“But they will be a bit more targeted and more dynamic in nature than a 10-year agreement,” he said. “We see VSAs as beneficial, and they will supplement the backbone network that we control ourselves.”

2M operates nine services on the trans-Pacific trade. For its five US East Coast services, the alliance has a vessel-sharing agreement in which Zim Integrated Shipping Services gains slots on those services, while the latter offers slots on its two separate Asia services. The 2M Alliance operates three US-North Europe services, two US-Mediterranean services, and nine Asia-Europe services, with six of those routings connecting to North Europe and three to the Mediterranean.

While Sigsgaard also expects the Ocean and THE alliances to continue as carriers all had different strategies, Lars Jensen, CEO of Vespucci Consulting and Journal of Commerce analyst, was not so sure. In a LinkedIn post Wednesday, Jensen said the end of the 2M Alliance was likely the beginning of a re-shaping of the Ocean Alliance and THE Alliance on the major east-west trades.

“This will change the competitive dynamics on the east-west trades for all major carriers, and clearly all carriers will take a close look at which threats and opportunities this will bring forth,” he noted. “In essence this should be seen as the first domino of many to fall over the next one to two years.”