DENMARK/GERMANY – Danish shipping behemoth A.P. Moeller-Maersk and Germany’s Hapag-Lloyd have announced a groundbreaking vessel-sharing agreement named Gemini Cooperation.

This collaborative effort comes as the shipping industry grapples with the aftermath of the pandemic-induced cargo boom, which led to a surplus of vessels and a sharp decline in freight rates.

The recent escalation of tensions in the Middle East, particularly in the Red Sea, has added a layer of complexity to shipping routes.

Shippers have been compelled to divert vessels over thousands of miles to steer clear of the Red Sea, where attacks on merchant vessels by Houthi forces in Yemen persist.

In response to an attack on its vessel Maersk Hangzhou on December 30, Maersk has halted all transit through the Red Sea and Gulf of Aden until further notice. Similarly, Hapag-Lloyd had previously announced its intention to avoid Red Sea transits.

The Gemini Cooperation aims to enhance operational efficiencies and expedite the companies’ decarbonization initiatives by establishing a flexible and interconnected ocean network.

The collaboration will involve a fleet pool of approximately 290 vessels, boasting a combined capacity of 3.4 million containers. Maersk will contribute 60% of the ships, while Hapag-Lloyd will deploy the remaining 40%.

Vincent Clerc, CEO of Maersk, emphasized the customer-centric approach, stating, “By entering this cooperation, we will be offering our customers a flexible ocean network that will be raising the bar for reliability in the industry. This will strengthen our integrated logistics offering and meet our customers’ needs.”

The long-term partnership targets a schedule reliability of above 90% once the network is fully phased in. In light of this collaboration, Hapag-Lloyd will exit THE Alliance at the end of January 2025, severing ties with Korea’s HMM, Singapore’s Ocean Network Express, and Taiwan’s Yang Ming.

Simultaneously, Maersk had previously announced the end of its 2M alliance with Mediterranean Shipping Co. in January 2025.

Analysts at Barclays view this development as a change in partners rather than an incremental positive in industry consolidation or structure.

“We see a rapidly evolving industry dynamic with a rearranging of deck chairs following the dissolution of the 2M alliance in January 2025,” they noted.  

“We remain of the view that the industry structure remains highly competitive with a persisting lack of capacity discipline.”

The shipping industry faces mounting challenges, including plummeting freight rates and overcapacity. Maersk is already taking steps to address these challenges by cutting over 10,000 jobs and seeking USD 600 million in savings.

Despite the disruptions in the Red Sea impacting near-term container spot rates, oversupply remains a significant concern, with sea freight volumes only marginally higher than 2019 while container vessel capacity exceeds 20% higher than 2019.

The Gemini Cooperation emerges as a pivotal move in response to the evolving dynamics of the shipping industry, marking a collaborative effort to navigate challenges and offer enhanced services to global customers.

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