Jensen: Gemini Cooperation could reshape container shipping networks

The network composition of major container shipping alliances may undergo significant changes if the Maersk-Hapag Gemini Cooperation proves to be a successful strategy. Lars Jensen, CEO of Vespucci Maritime, and a noted industry expert, suggests that the new network design, which prioritises larger and fewer hubs with increased transshipments, could set a precedent for other alliances.

Jensen noted that if Maersk and Hapag-Lloyd can effectively execute their operational goals, it is likely that other alliances will gradually modify their networks to adopt similar strategies. This shift could lead to fewer direct services, sparking concerns among shippers, but ultimately, the focus will remain on achieving the lowest possible cost for moving goods.

“We’re probably going to see a different design of the Gemini network if we have to go around Africa. But that one aside, what I see here is a beginning of a change of the network design across a lot of the alliances,” Jensen said during a recently held Virtual Panel Discussion with Rolf Habben Jansen, CEO of Hapag-Lloyd.

As explained, the outcome of this cooperation could mark the beginning of a broader transformation in how container shipping alliances design their networks, potentially influencing the entire industry’s future.

“Shippers will very loudly probably complain that some of their direct services are no longer there. But at the end of the day, this comes down to what’s the price of moving the goods. So if Hapag-Lloyd and Maersk can operationally execute what they set out to do, I think it is going to set the tone for also the other alliances adjusting their networks over the coming years,” Jensen added.

The vessel-sharing agreement between global liner majors Maersk and Hapag-Lloyd is currently undergoing a review by the US Federal Maritime Commission (FMC). However, both players expect the network to be in operation by February 2025.

The extensive vessel-sharing plan involves 290 ships with a combined capacity of 3.4 million TEU. The network comprises 26 mainline services supported by 32 dedicated shuttle routes. Among these, 12 are main hub ports, with 10 either operated by or having ownership stakes from Hapag-Lloyd or APM Terminals.

The loops are focussed heavily on ‘hub & spoke’ transhipment hubs supported by high-capacity dedicated shuttle loops that link the regional hubs with other gateway ports.

The carriers have three primary objectives for the Gemini Agreement at the port level: achieving operational excellence in terminals, expanding network capacity by 30%, and ensuring integrated planning between carriers and terminals. These goals are essential for Gemini to meet its target of 90% vessel reliability.

Bjorn Vang Jensen, CEO of Nanooq Management Consultancies, acknowledged the challenges of selling a network with more transhipments over direct calls but highlighted the potential long-term benefits. “Even though shippers don’t like transhipment, they will absolutely learn to live with them, especially if it means on-time arrival,” he said. Jensen also noted that shippers are accustomed to delays of 3-7 days compared to the performance schedule, and reducing these delays could be a “massive game changer worth paying a premium for.”