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Maersk Partners With MSC to Cut Costs After China Blocks Pact

Published on Jul 10 2014 8:30 AM in Supply Chain

Maersk Partners With MSC to Cut Costs After China Blocks Pact

A.P. Moeller-Maersk A/S said it has entered into a long-term vessel sharing agreement with MSC Mediterranean Shipping Co. after Chinese regulators unexpectedly blocked a global alliance last month.

The 10-year agreement with MSC is for Asia-Europe, Transatlantic and Transpacific routes, and includes 185 vessels, Maersk said. The deal is expected to improve network efficiency and vessel capacity.

Maersk is struggling with overcapacity and falling prices which will persist for “years to come,” Vincent Clerc, the chief trade and marketing officer at Maersk Line, said last month. The Danish company and Paris-based MSC had planned to create a global alliance with 255 vessels with Marseille-based CMA CGM SA until Chinese officials rejected the plan on June 17.

Under the new agreement with MSC, Maersk Line said it will contribute about 55 per cent of the total capacity. Both parties will keep their independent commercial relationships with customers, and they won’t jointly own vessels.

According to Maersk, the companies expect the agreement to go into effect in early 2015 after getting regulatory approval.

Bloomberg News edited by ESM

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