According to sources in the shipping industry on March 28, Gemini Cooperation, a shipping business alliance between the world’s No. 2 shipping company Maersk and No. 5 Hapag-Lloyd to go live in February next year has proposed a plan to exclude Busan Port of South Korea and ports of Japan, Vietnam, and Taiwan as ports of call on its Europe-Asia routes.
Gemini Cooperation plans to consolidate ports that they are using into 19 major ports of call and four transshipment hubs. The transshipment hubs will be the Chinese ports of Shanghai and Ningbo, the port of Singapore and the Malaysian port of Pelepas, with 71 large container carriers operating for seven services on the network.
Once the plan is implemented, the port of Busan will be downgraded to a feeder port (shuttle service port), meaning that Gemini Cooperation vessels will not call directly at the port of Busan on the Asia-Europe route.
This move by Gemini Cooperation is aimed at improving the on-time arrivals of cargo. According to import/export logistics platform Tradlinx, the average global carrier punctuality rate fell 5.1 percentage points from December 2023 to 51.6 percent, the lowest level since September 2022, in January 2024. This was due to an increase in ships which changed routes due to the Red Sea crisis which delayed ships’ arrival times.
Among the top 13 global container carriers, the most punctual carrier was CMA CGM with 54.7 percent while South Korea’s HMM was at the bottom of the list along with Taiwan’s Yang Ming at just under 45 percent.
If Gemini Cooperation’s plan is realized, it will indirectly affect HMM’s profitability. This is because it will add one more step to transportation which will increase costs and time to transport cargoes.
“From the perspective of Korean import and export companies (shippers), if foreign carriers leave Busan Port, freight rates will eventually rise,” said a Korean logistics industry insider. “In the case of HMM, it has secured low freight rates and punctuality by forming a shipping business alliance named ‘The Alliance’ with Hapag-Lloyd but if The Alliance is dissolved next year and Busan Port is excluded from the hub ports, it will eventually lose its competitiveness due to rising freight rates and declining punctuality.”
He suggested that HMM join or form a new shipping business alliance that will keep Busan as a hub port.
“HMM’s shipping business alliance will be maintained until this year, so there will be no immediate impact,” an HMM official said. “We are reviewing various measures regarding a reorganization of the shipping business alliance next year.”