Maersk & MSC Clinch for New Shipping Alliance
Maersk Line has announced a fresh alliance with Mediterranean Shipping Co (MSC) on some of the world’s busiest cargo routes after China scuppered a previous tie-up, known as P3, between them and CMA.
Maersk and MSC say sharing vessels will cut costs, fuel usage and emissions in the proposed 10 year deal, which would start in early 2015. But critics, including those sending cargo, fear the shippers could dominate key trade routes carrying consumer goods around the world.
It is believed the shippers had a better a chance of gaining Chinese approval with the latest deal because it involves fewer ships and volumes of goods and is structured differently.
In statements issued on Thursday, MSC and A.P. Moller-Maersk said 185 vessels would be shared, including 20 of Maersk's giant Triple-E ships, with an estimated capacity of 2.1 million 20-foot equivalent units (TEU).
They will run the trans-Atlantic, trans-Pacific and Asia-Europe routes, critical paths in the global trade of goods.
Last month’s rejected deal between Maersk, MSC and France's CMA CGM aimed to share about 250 vessels and would have had more than 40 percent of Asia-Europe and trans-Atlantic trade and 24 percent of the trans-Pacific market, according to estimates.
It marked the first time China, the world’s second-biggest economy, had blocked a proposed move involving solely foreign entities, and analysts said it showed that concerns over the impact on its own shipping companies and not their clients was crucial.
The exclusion of CMA could help allay Chinese fears over undue market dominance as the French group is already part of a shipping pact with China Shipping Container Lines and United Arab Shipping Company, the future of which would have been uncertain if P3 went ahead.
This latest moved, named the 2M alliance, is only a vessel sharing agreement. The P3 plan included an operating company which was the main reason why Chinese regulators looked at it as a merger.
The Chinese Ministry of Transport will look at the deal this time; P3 had been investigated by the Commerce Ministry.
UPS Posts Record Second Quarter with Revenues of $23.4bn
Growth across each of its core segments resulted in record results for UPS in the second quarter, with group revenues climbing 14.5% year on year to $23.4bn.
The global logistics outfit achieved consolidated operating profit of $3.3bn, up 47.3% compared to the same period in 2020. It is the second consecutive quarter of record profit, and a significant rise on Q1’s $2.9bn.
UPS Q2 Revenues in Brief
- Consolidated revenues: $23.4bn (+14.5% yoy)
- Domestic: $14.4bn (+10.2%)
- International: $4.82bn (+30%)
- Supply Chain Solutions: $4.2bn (+14.3%)
The US company’s domestic segment performed steadily with 10.2% revenue growth to $14.4bn. But it was its international and supply chain solutions segments where UPS saw the biggest gains. Strong demand in Europe led an increase in international revenues of 30% to $4.82bn. UPS’ supply chain solutions division saw revenue growth of 14.3% to $4.2bn, driven, the company said, “by strong demand in nearly all businesses”.
UPS’ steady growth throughout the pandemic has been led by the overarching vision of its chief executive Carol Tomé to do “better not bigger”, focussing on efficiency and high margin deliveries through its network over pure scale and volume.
“I want to thank all UPSers for executing our strategy and delivering high service levels, which fuelled record financial results in the second quarter,” she said. “Through our better not bigger framework, we are moving our world forward by delivering what matters.”
UPS Completes Sales of UPS Freight
The second quarter also saw UPS complete the divestiture of UPS Freight in a deal worth $800m - with a surprise result for the division, now called TForce Freight, under new owner TFI International.
“The second quarter was historically significant for TFI International, with the closing of our UPS Freight acquisition and record performance across the board,” said Alain Bédard, chairman, President and Chief Executive Officer, TFI International. “Particularly gratifying is the performance of TForce Freight, which has exceeded our operating ratio targets far ahead of schedule, and we have only just begun our work.”
In it first two months of ownership TFI reported that adjusted operating ratio (OR) was 90.1% for TForce Freight, far outperforming its forecasted OR of 96-97%.
“I wish to thank our entire team for their hard work and remarkable efforts, and officially welcome aboard our new TForce Freight colleagues who have seamlessly come under the TFI umbrella and are already making stronger than expected contributions,” Bédard added.