Industry News
Stay current on industry related news and updates

Asia gateways scramble as Gemini alliance plans big shift to feeder port network

Date :24-02-23 Vsits : 178


Feb 23, 2024, 2:00 PM EST

Gemini Cooperation, the Maersk/Hapag-Lloyd alliance due to launch next February, is set to downgrade some of the carriers’ current key cargo gateways in Asia to feeder ports under its proposed “hub-and-spoke” network linking Asia with Europe, the Mediterranean and North America.  

The new partnership will consolidate calls at just five main hubs in Asia — Shanghai, Ningbo, Yantian, Singapore and Tanjung Pelepas in southern Malaysia. 

The move has already prompted Busan, one of the ports most affected by the downgrade, to urge Maersk and Hapag-Lloyd to rethink their Gemini vessel schedules and restore some calls at the South Korean gateway. Sources hope that other carriers or alliances can fill some of the gaps in direct calls left by the Maersk/Hapag-Lloyd alliance.   

Under the preliminary Gemini network, Busan will lose all its main line calls by Maersk and Hapag-Lloyd on Asia-Europe, Asia-Mediterranean and trans-Pacific services. Direct calls on two Asia-US East Coast and one Asia-Middle East services will be retained, preliminary schedules show. 

Hong Kong will also cease to be a gateway, with cargo trucked or feedered to Yantian, one of the four Shenzhen terminals. 

Highlighting the shift, Hutchison Port Holdings Trust (HPH Trust), the Singapore-listed subsidiary of the global operator, said as a major export hub for the US and European export markets, Yantian has been selected by the Gemini Cooperation as a main port of call in South China. 

“For [Hong Kong’s] Kwai Tsing Terminals, it is anticipated that some of Maersk’s and Hapag-Lloyd’s throughput currently handled in Hong Kong may shift to Yantian when the operation starts,” Hutchison said in its annual results commentary on Feb. 7. “HPH Trust will work closely with Gemini Cooperation to identify any new opportunities which the new cooperation may bring.”  

HPH Trust controls Hongkong International Terminals and Yantian International Container Terminals.   

Xiamen, Kaohsiung also losing direct connectivity 

Other ports that will lose direct connectivity include Xiamen in eastern China, which has calls by eight existing Maersk Asia-Europe and trans-Pacific services; Dalian in northeast China; Kaohsiung in Taiwan, which has calls by five Hapag-Lloyd trans-Pacific services; and Ho Chi Minh/Vung Tau in Vietnam. Vung Tau is a significant port for both Maersk and Hapag-Lloyd, with a total of 10 services, including eight on the trans-Pacific, calling there. 

Several ports in Japan, notably Tokyo and Kobe, will also become feeder ports. 

“We’re hoping shippers, forwarders and the ports themselves can persuade Maersk and Hapag-Lloyd to retain some direct calls on the main trades as the network plan is confirmed,” a senior executive at an Asia-based freight forwarder told the Journal of Commerce. 

Lee Eung-hyuk, director of international logistics at the Busan Port Authority, said the port handles about 1 million TEUs of export and import cargo on the European trade lane alone with between 14 and 16 weekly services, depending on the time of year. Four are operated by the Maersk-Mediterranean Shipping Co. 2M Alliance and five by THE Alliance, of which Hapag-Lloyd is part.  

“Maersk and Hapag-Lloyd’s announcement that they will not call at Busan Port on their Europe services will be a significant disadvantage for their existing customers, [such as] Korean import and export shippers,” Lee told the Journal of Commerce.  

“For this reason, we think the decision may still be reversed in the future,” he added. 

In Hong Kong, Hapag-Lloyd is currently the second-largest carrier behind Cosco Shipping in terms of scheduled capacity on Asia-Europe and North American services, deploying approximately 615,000 TEUs a quarter, according to figures from British maritime consultancy MDS Transmodal. 

Maersk, meanwhile, deploys about 261,000 TEUs of capacity per quarter on North American-related services calling at Hong Kong, MDS Transmodal senior consultant Antonella Teodoro, told the Journal of Commerce.  

All that volume would potentially shift to nearby Yantian in eastern Shenzhen under the Gemini service revamp.  

Further deep-sea decline for Hong Kong 

Maersk’s Asia-Europe and Mediterranean services are handled by the carrier’s hub at Nansha, about 60 miles northwest of Hong Kong and the main international gateway for Guangzhou. 

Roberto Giannetta, chairman of the Hong Kong Liner Shipping Association, said the move by the Gemini Cooperation to drop Hong Kong mainline calls continues the decline in deep-sea services that has been seen for some time. This is reflected in total container volumes, which fell to 14.3 million TEUs last year, the lowest since 1998.   

Giannetta said the slide was exacerbated by COVID-19 pandemic restrictions which largely prohibited truck traffic from moving between Hong Kong and adjacent Shenzhen, with carriers encouraging shippers to use Shenzhen port rather than Hong Kong. 

“The lack of strategy on the part of Hong Kong port to intentionally promote and attract services compared to significant and meaningful planning on the part of all other regional ports has also contributed to the decline,” Giannetta told the Journal of Commerce. 

Commenting on the sidelining of Hong Kong by the Gemini alliance, a spokesperson for the Hong Kong Transport and Logistics Bureau said the government will actively work with the industry to explore new external markets.  

“Specifically, we need to expand the international connections of the port and increase the volume of origin and destination cargo handled by the port, so as to solidify our status as the transshipment hub in Asia,” the spokesperson told the Journal of Commerce. 

Customers ‘skeptical’ at this point 

Maersk said Gemini’s 26 mainline services across seven trades including Asia-Europe, the US East and West coasts, Asia-Middle East and trans-Atlantic will be complemented by 32 feeder shuttle services, including 13 in Asia. 

Hapag-Lloyd said 95% of the Asia-Europe volume would get faster or stay the same using the hub and shuttle network, although that would drop to 85% on the trans-Pacific based on forecast transit times. Schedule reliability would be 90% across four of the main trades, Hapag-Lloyd said in a Gemini presentation. 

“The potential saving in time and cost made on their core loops will be translated into more third-party feedering,” a senior executive at an Asia carrier told the Journal of Commerce. “From what we hear at this stage, customers, overall, are rather skeptical it will work.”  

The Gemini combination will comprise a pool of about 290 vessels with a combined capacity of 3.4 million TEUs, of which Maersk will deploy 60% and Hapag-Lloyd 40%. 

Both Hapag-Lloyd and Maersk said the service details provided when the Gemini alliance was announced last month were “preliminary.” The carriers said they were also studying the possibility of operating their own services outside the alliance on Gemini’s seven main trades. 

“The Gemini Cooperation will cover most of our services on these trades, however, we may choose to continue to operate or participate in a few parallel services outside Gemini, just like we do today,” a Maersk spokesperson told the Journal of Commerce. 

Added a Hapag-Lloyd spokesperson: “We are currently reviewing our network outside Gemini Cooperation but have not finalized our plans yet.” 

Further reading