Commentary: OCEAN Alliance has largest stake in U.S.-China trade war
on 11 Jul, 2019 14:08

      The OCEAN Alliance has the most at stake when it comes to the ongoing trade battle between China and the United States.
      It has a significantly higher presence on the China to U.S. trade than both the 2M Alliance and THE Alliance. Consequently, if China and the U.S. do not resolve trade tensions, the OCEAN Alliance could have to alter its liner service network to a further extent than the other two alliances.
      The chart below, built using data from BlueWater Reporting’s Country to Country Transit Analysis by Service tool, shows the OCEAN Alliance operates 17 services from China to the U.S., followed by 12 services operated by THE Alliance and nine services operated by the 2M Alliance, two of which the 2M Alliance jointly operates with ZIM.


      Additionally, the OCEAN Alliance offers significantly more transit options from China to the U.S. than the other two alliances, as illustrated in the chart below, which was also built using data from BlueWater Reporting’s Country to Country Transit Analysis by Service tool. For this chart, transit options from China to the U.S. were calculated by adding together the port to port pairings — Chinese origin port and U.S. destination port — for each service on the trade.


      The OCEAN Alliance has the largest global presence overall, which will help mitigate the headwinds it could potentially face from the ongoing trade tensions between China and the U.S. The OCEAN Alliance’s global presence in terms of deployed TEU capacity and fleet size is significantly larger than THE Alliance and the 2M Alliance, as shown in the chart below. The chart was built using data from BlueWater Reporting’s Capacity Report and represents services in which each alliance is the dominant or only vessel provider.


      Services in which the OCEAN Alliance is the dominant or only operator collectively deploy 397,742 TEUs each week toward trade routes across the globe. These services deploy a total of 338 vessels with a combined capacity of 3.66 million TEUs.
      Going forward, it appears the U.S.-China trade war is currently at a standstill, although there is now a sliver of hope a deal could be reached in the near future following President Donald Trump’s meeting with Chinese President Xi Jinping on June 29 at the G20 Summit in Osaka.
      In the wake of their meeting, Trump tweeted, “I had a great meeting with President Xi of China yesterday, far better than expected. I agreed not to increase the already existing tariffs that we charge China while we continue to negotiate.
      “China has agreed that, during the negotiation, they will begin purchasing large amounts of agricultural product from our great farmers,” Trump added. “At the request of our high tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy product from them, which will not impact our national security.
      “Importantly, we have opened up negotiations again with China as our relationship with them continues to be a very good one. The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good! There will be no reduction in the tariffs currently being charged to China,” Trump concluded.
      Only time will tell what will happen next, but if the U.S. slaps more tariffs on Chinese goods, all three ocean carrier alliances, particularly the OCEAN Alliance, will have their work cut out for them in regards to redrawing their liner service networks.