What is an Ocean Alliance (And Why It's Important)?
Ocean alliances are maritime freight carriers that form groups to pool resources and increase their coverage to meet the demands of their customers. Ocean alliances are a critical resource for shipping companies because they allow them to provide seamless service across the globe. They also provide an opportunity for freight carriers to expand their services with minimal additional investment. In this article, we’ll talk about ocean alliances so you can better understand their importance.
An ocean alliance is also commonly referred to as a shipping alliance. Shipping companies need ocean alliances because operating expenses make up the majority of shipping company expenses. This is not only a cost issue for shipping carriers but, to put it simply, if every big shipping company purchased the fleet it needed to distribute globally, it would change economic conditions that impact supply and demand in a way that hurts the industry.
A typical shipping alliance offers global coverage, sharing of vessels and allocation of slots on vessels. Currently, there are three ocean alliances comprised of carriers teaming up to provide global solutions on shared resources. These are 2M, The Ocean Alliance and THE Alliance, respectively. These three alliances were formed in 2017 among eight of the world’s largest carriers. In prior iterations, shipping alliances were formed, usually by large clusters of small carriers, but this is no longer the industry standard.
One important feature of an ocean alliance is its inherent impact on carriers who can buy mega-ships they might not otherwise be able to own. This allows shipping carriers to not only expand their business but also create an impact on the global economy. Economists study shipping alliances to determine how things like overcapacity of mega-ships influence demand. Ultimately, shipping alliances have a number of benefits for carriers who serve customers around the globe.
To learn what benefits and trends you can come to expect from ocean alliances, contact a friendly ClearFreight consultant today.