In an unexpected turn of events, the Federal Maritime Commission (FMC) today slammed the brakes on what was poised to be one of the most significant operational container shipping alliances..
The Gemini Cooperation Agreement between Maersk A/S and Hapag-Lloyd AG, including Hapag-Lloyd USA, LLC, may not take effect next week as originally planned..
This dramatic development comes after the FMC issued a Request for Additional Information (RFAI) on the 12th of July 2024 to assess the potential competitive impacts of this colossal arrangement..
The Alliance Players and the Plan
The Gemini Cooperation Agreement, filed on May 31, 2024, aimed to create a global powerhouse by allowing Maersk and Hapag Lloyd, the world’s 2nd and 5th largest container shipping lines to share vessels across key international routes, including the United States, Asia, the Middle East, and Europe..
With such significant stakes, this agreement was poised to reshape the landscape of global trade and logistics. However, the FMC’s intervention has halted this ambitious plan in its tracks..
2M, the current number 1 global container shipping alliance in terms of market share, which is a cooperation between MSC (1) and Maersk (2), is set to come to an end in 2025..
As per our previous article about the changing landscape of global container shipping alliances, if the Gemini Cooperation had started, it would have accounted for 21.60% of the global alliance market share closely following Ocean Alliance which sits at 29.10%..
FMC Demands Answers
The FMC’s decision to issue an RFAI was based on their need for more clarity and detail which was apparently absent in the initial filing..
In its statement, the FMC said “The Commission uses the RFAI process to identify and achieve clarity on matters that were not addressed by the filing parties or where insufficient information was provided in the originally filed agreement. The Commission has determined that the Gemini Cooperation Agreement as submitted lacks sufficient detail to allow for a complete analysis of its potential competitive impacts.”
The Clock is Ticking
Time is of the essence as the Commission now awaits a fully compliant response from Maersk and Hapag-Lloyd.. Only upon receiving the detailed information can the FMC proceed with its review..
As per the statement, the FMC has a 45-day window to scrutinize the agreement for any legal and competitive concerns once the responses are deemed complete..
This development highlights the critical nature of the information being sought, which remains commercially sensitive and undisclosed to the public..
Public Scrutiny Awaits the Gemini Cooperation
Adding another layer of complexity, a 15-day public comment period will open following the publication of the RFAI notice in the Federal Register next week..
This allows stakeholders and the public to voice their opinions and concerns about the Gemini Cooperation Agreement, ensuring transparency and accountability in the decision-making process..
Will the giants of the sea manage to navigate these regulatory waters..?? The seas of international shipping are anything but calm..!!
