End of the 2M Alliance: What are the impacts and what can you do to prepare?

What is the 2M alliance?

The 2M alliance is a strategic partnership between two of the largest shipping companies in the world, Maersk Line and MSC. 

It was created to offer customers a more comprehensive and efficient global service network by sharing resources such as ships, ports, and terminals. 

The alliance offers services on a direct and transshipment basis, covering trade lanes such as Asia-Europe, transpacific and transatlantic, which are considered to be the most important and busiest trade lanes in the world. 

2M is one of the largest and most significant shipping alliances in the industry, providing customers with a more competitive and cost-effective option for their shipping needs.

Why did the companies terminate their agreement?

​​The decision to end the alliance was taken jointly by Maersk and MSC, and several reasons were given for the decision. One of the main reasons for ending the alliance was the changing market conditions caused by the COVID-19 pandemic. The pandemic caused a significant downturn in world trade, resulting in many vessels being taken out of service and a significant reduction in demand for shipping services. This resulted in overcapacity in the shipping industry, which put pressure on shipping rates and made it difficult for the 2M alliance to continue to operate profitably.

Another reason for the end of the alliance was the increased competition in the market. They both increased their fleet size and services, which made it increasingly difficult for the alliance to compete with other major shipping lines.

Finally, the end of the alliance was also driven by the decision to focus on the individual strategic priorities and goals of the two companies as they reassessed their future plans and investments.

It is worth mentioning that Maersk and MSC continue to cooperate on certain trades, such as the Mediterranean-Northern Europe and Asia-Mediterranean trades, where they share vessels and capacity under separate agreements.

What impact can we expect?

The end of the 2M Alliance would likely have a significant impact on the shipping industry. Helping to increase efficiency and reduce costs through a shared vessel and port capabilities. Without the alliance, Maersk and MSC would likely have to compete more directly with other industry giants such as CMA CGM and the Ocean Alliance. This could lead to increased competition and potentially higher prices for shippers. Additionally, the end of the alliance could also lead to a reduction in the overall number of vessels and ports utilized, potentially leading to a reduction in capacity and increased transit times for shipping.

It would also affect the global supply chain as a whole, as the alliance has been a major player in the industry, controlling a significant share of the market. The end of the alliance could lead to a shift in market share and changes in the competitive landscape.

In summary, the end of the 2M Alliance would likely have a significant impact on the shipping industry, leading to increased competition and potentially higher prices for shippers, and could also have ripple effects throughout the global supply chain.

How should companies respond to the 2M termination news?

Here are some steps that can be taken to prepare for this new situation:

1. Review contracts : Review existing agreements with 2M and other shipping lines for terms and conditions in the event of a change in this sector.
2. Identify alternative shipping routes : Identify alternative shipping routes and carriers in the event of changes in capacity or transit times.
3. Establish relationships with new carriers : Build relationships with new carriers to ensure continuity of service in the event of industry changes.
4. Monitor market developments: Closely monitor market developments and industry changes to anticipate any potential issues and make adjustments as necessary.
5. Evaluate various supply chain strategies : Evaluate various supply chain strategies to ensure they are still viable in the event of industry changes.
6. Invest in new technologies: Invest in new technologies such as real-time tracking, scanning of shipping documents and automation that would increase visibility, efficiency and reduce costs in the event of change.
7. Diversify suppliers : Diversify suppliers across regions and shipping lines to reduce dependence on one carrier.

It is important to stay informed and be flexible to adapt to any changes in the industry. Companies must also be prepared to re-evaluate and adjust their strategies if necessary to ensure continuity of service and minimize negative impacts.

What are the experts saying?

For Ben Walker, owner of Ditto Transcript

“The 2M alliance is a shipping partnership between the two largest container shipping companies in the world, Maersk and MSC. If the partnership were to end, it would likely have significant impacts on the global shipping industry.

One impact would be increased competition among shipping companies, which could lead to lower prices for consumers. It could also lead to changes in shipping routes and schedules, as well as an overall shift in the balance of power among major players in the industry.

Another impact could be consolidation among smaller shipping companies in response to increased competition. This could lead to further concentration of power among a smaller group of large companies.

It is difficult to say whether or not it is possible to prepare for the end of the 2M alliance, as it would depend on the specific circumstances leading to its dissolution. However, companies that operate in the shipping industry could consider diversifying their partnerships and building relationships with a variety of shipping companies to mitigate potential disruption.

Shippers and logistics companies should prepare for changes in the industry.”

For Garit Boothe, CEO and Founder of Digital Honey

“The 2M Alliance is a strategic move by Maersk and MSC to join forces to better compete in the shipping industry. This new alliance is expected to have a range of impacts on businesses, so it’s important to be prepared.

For starters, the 2M Alliance will likely increase industry competition as the two companies will now have a larger

 market share. This could lead to decreased rates as they compete with other shippers. Additionally, the expectation is that the 2M Alliance will use more efficient vessels, meaning that transit times could be reduced. On the other hand, the 2M Alliance could also create supply chain complexities. Companies may find themselves needing to ad just their current supply chain strategies to accommodate the new alliance.

To make sure you are ready for the 2M Alliance, it’s important to assess the impact it could have on your current supply chain and make changes as needed. Be sure to keep an eye on industry trends and be prepared to take advantage of any cost-saving opportunities that arise. Finally, make sure to seek out supply chain experts to help you better understand the impact of the 2M Alliance and how you can best prepare for it.”