Shipping alliance changes benefit shippers

Gemini Cooperation partners Maersk and Hapag-Lloyd plan to deliver massively improved schedule reliability levels of c.90% when they commence operations in February 2025, but they will face challenges in attempting to do so.

The Gemini Cooperation carriers are committing to achieving over 90% schedule reliability once their new network is fully rolled out and when one considers that ocean schedule reliability for Asia to Europe trades dropped to 39.4% in January, that really is a bold pledge.

Gemini will operate via 12 ‘hub-and-spoke’ terminals in Asia, EMEA, North and South America, with 32 shuttles operating to and from the transhipment hubs, using bespoke technology to maintain performance and monitor myriad factors including weather, stowage plans, availability of cranes, yard equipment and labour.

However, as was evidenced during the pandemic port operations can easily be overwhelmed, especially when volumes surge and transshipment ports have had a long reputation as ‘black holes’ for cargo.

Reliability is attractive to every shipper, but it is particularly critical for those working to deadlines and businesses that want to keep inventory levels lean.

Currently less than half of vessels are on schedule and over the last decade global vessel schedule reliability has averaged 70% and has?never exceeded 86% over any monthly period.

Gemini Cooperation believe that if they can deliver a 90-95% reliability, they will replace uncertainty with consistency of on-time performance, which will translate as a reduction in inventory costs for shippers.

And while Gemini’s goal of 90% will appeal to many shippers, others will be wary of the hub and spoke framework, which may encourage the OCEAN Alliance members – CMA CGM, Cosco Shipping, Evergreen and OOCL – to leverage their size and adapt their network design to offer more direct port-port pairs for shippers that want to avoid transhipments.

The Gemini partners’ ability to achieve these unprecedented levels of reliability rests on their effective control of transshipment ports.

Consistently high levels of productivity at those ports and a reduction in the number of origin and destination ports are critical to avoid delays and the potential for delays to cascade.

Traditional Asia-Europe strings typically have in the region of six ports in Asia and similar numbers in Europe, which means you have potential for trouble at 12 or more points.

For example, if a vessel experiences a delay at point one it may miss its planned berth window at subsequent points, which means the vessel’s master is then looking to the port or terminal operator to fit them in, without disrupting the berthing time of those ships that arrive on schedule.

We are monitoring the evolution of the shipping alliances and will – as always – negotiate the best price and volume deals for our customers.

If the potential benefits offered by the Gemini Cooperation or OCEAN Alliance are of interest DM Stefan Holmqvist and he can outline how equivalent solutions could support your supply chain today.