Shipping alliances, as the name suggests, are groups of carriers that collaborate in context to trade routes with the help of a detailed agreement. These maritime industry partnerships strengthen operations and increase the efficiency of the shipping industry while reducing costs. In addition, the alliances have both advantages and disadvantages for the shipping industry. They sometimes create problems regarding fair competition and market control. 

In this detailed guide to shipping alliances, we will explore the advantages and disadvantages of these collaborations, future trends, and related case studies. 

What are shipping alliances? 

A shipping alliance is an agreement between two or more shipping companies to manage all the operational and commercial activities. Under this container shipping collaboration, carriers can pool their resources, share the liabilities, and enhance their competitiveness in the market. The group of shippers has aligned for common goals to benefit all involved in the shipping, not just the carriers but also the customers, by obtaining better rates and routes and reducing transit times for their shipments. 

The main aim of shipping companies in forming shipping alliances is to cut variable costs. Gradually, they realize that under the current economic condition, the companies alone can’t manage the services, so collaborating with different companies will be beneficial as the routes, ships, and services will be pooled, and no route will remain unserviced. 

What are the benefits of shipping alliances?

Shipping alliances brought advantages to both shipping carriers and customers. You can adopt this strategy to experience the advantages mentioned below: 

1. Enhanced resource allocation: Under this collaborative shipping strategy, companies can pool their resources, leading to better utilization of the vessels, goods, routes, and time. This will reduce the transient’s time and money. These agreements optimize the container’s capacity, decrease idle time, and make the most available assets. 
2. Pooling vessel fleets: Shipping alliances allow carriers to pool their fleets, enabling one company to use the other company’s ships for a particular route. This avoids crowding in specific market segments. 
3. Enhances operations efficiency: A team works better than an individual, as there is a particular group of people designed for a specific task, which enhances the efficiency of the whole process. This decreases paperwork, improves communication between different teams, and ultimately streamlines the process. 
4. Best knowledge and resources shared: Under this, not only are the goods and ships pooled, but also knowledge about how to make the journey faster and more efficient without damage is shared. All the members can share their expertise and innovative solutions regarding shipping with each other. This can lead to the adoption of new technologies and the enhancement of operational procedures with customer service. 
5. Teamwork of operations and logistics: Shipping lines combine to align all the processes related to shipping, including loading, unloading, ship arrivals, and departures. If the companies are in an alliance, they easily manage logistics and shipping. 
6. Terminal sharing: Shipping companies can collaborate by sharing container ports or terminals for cargo handling and storage. Using the same terminals will reduce the cost of structuring and maintaining their ports.
7. Sustainability: Under shipping alliances, resources are pooled, fuel usage is decreased, and the shipping industry’s contribution to pollution is reduced. 

What are the drawbacks of shipping alliances?

Shipping alliances offer various benefits to the carrier and customer. However, managing a group of individuals operating different cargo on common ships is quite challenging in some aspects. So, let’s have a look at those drawbacks: 

1. Less operational independence for the carriers: Under this, the different companies have to cooperate with each other’s management. This reduces operations’ flexibility and carriers’ power in decision-making in port logistics and ship operations. 
2. Depending on the other carriers: Shipping alliances increase one carrier’s dependence on the other. If one carrier makes a mistake, both shipments will face the repercussions. You must depend on the other carrier for every procedure, as you can’t operate alone. It has a negative impact on the shipping schedules. 
3. Less agility: Customers will have less flexibility in choosing carriers or services. A shipping alliance can create a rigid and strict market structure. Customers must also listen to their other partners when choosing a carrier. 
4. Reduced competition: More shipping alliances mean fewer competitors in the market. This reduces customer choice and increases the cost. Therefore, shipping alliances will decrease the market’s competitiveness, which can also lead to a loss of efficiency. 
5. Regulatory laws: To avoid legal and compliance issues, you must address some regulatory bodies, such as organizations like the EU (European Union) and the US (United States). Adhering to their laws is complex but mandatory for all shipping alliances to avoid supply chain disruptions. 

Case studies and examples of maritime alliances

Many shipping alliances in the real world have succeeded in the market. Let’s have a look at some of the successful and future shipping alliances: 

1. 2M alliance: This alliance was formed between the Maersk and MSC (Medditterean Shipping Company). In 2015, they decided to collaborate on a ten-year ship-sharing arrangement on some specific routes, such as transpacific, transatlantic, and Asia-Europe routes. Under this, there was a strategic cooperating agreement with HMM (Hyundai Merchant Marine), but in 2019, they left and joined THE ALLIANCE. 
2. THE ALLIANCE: This ship alliance includes Hapag-Lloyd, ONE, HMM, and YML. It was recently highlighted because of the great US Gulf port service on the transatlantic routes. All the members in the east-west region are part of this alliance. 
3. Ocean Alliance: This alliance collaborates with COSCO, OOCL, Evergreen, and CMA. COSCO obtained OOCL in 2018 when it got antitrust and anti-monopoly approval from China, the USA, and Europe. Ocean Alliance Shipping is one of the successful alliances. 
4. Premier alliance: Three companies, Ocean Network Express (ONE), HMM, and Yang Ming Marine Transportation (Yang Ming), are involved in this alliance. They decided to collaborate for five years starting in February 2025. 

Future Trends and Considerations of Shipping Alliances

Shipping alliances are a growing trend in the shipping industry. There are some significant future expectations from this agreement. Meanwhile, let’s have a look at those future trends in the shipping alliance: 

1. Environmental impact: The shipping industry significantly contributes to pollution due to carbon emissions. However, keeping this in mind, shipping alliance usage will increase with time. More and more companies will promote the formation of alliances with other shipping companies.
2. Digitalization: Digitalization will also happen in shipping alliances. Technological usage will help streamline the agreement, terms, and conditions and align processes easily. 
3. Employment of larger vessels: To simplify and manage the shipping alliances, the production of large vessels will increase with time to accommodate a good quantity of goods from one place to another. 

Some basic considerations of the shipping alliances: 

1. Fleet deployment: In the shipping alliances, it is difficult to decide which container type to use to meet the cargo requirements of all the businesses involved. Consequently, corporations must select the correct container type for the cargo. 
2. Economic consideration: To ensure a cost-efficient journey, it is essential to consider the customer’s economic condition, budget, and the impact of the overall shipment. 
3. Prepare for unexpected incidents: Many unexpected accidents, thefts, and natural disasters can affect the shipment, so both companies must be aware of their policies for managing those liabilities and prepare a plan B to minimize the impact of these conditions on the shipment. 

Shipping alliances can benefit carriers and suppliers if managed and framed with reliable companies. The collaboration of different companies helps pool routes and resources, optimize space, and reduce shipment costs. With evolving shipping dynamics, these alliances are increasing with time. With proper consideration and after analyzing the pros and cons of this collaboration in the shipping industry, you can form a shipping alliance to help your business succeed and reach greater heights. 

LOTUS Containers offers 53-foot containers perfectly suitable for the large quantities of cargo employed in shipping alliances. They also provide services for the maintenance of shipping containers.