Partnership with Maersk will help Hapag double down on its sustainability targets, Jansen says

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Yesterday, container shipping heavyweights Hapag-Lloyd and Maersk made waves in the liner shipping industry after revealing a groundbreaking operational cooperation deal, leading to Hapag’s withdrawal from THE Alliance. The move marks a strategic shift that promises to reshape the dynamics of the global shipping landscape.

The long-term operational cooperation, named Gemini Cooperation, aims to enhance schedule reliability and sustainability starting from February 2025, mainly focusing on several East-West trades.

The new cooperation will comprise a fleet pool of around 290 vessels with a combined capacity of 3.4 million containers (TEU); Maersk will deploy 60% and Hapag-Lloyd 40%. Many of these ships will be ready to adopt cleaner fuels.

The network will comprise 26 mainline services, complemented by a global network of dedicated shuttles centered around owned and/ or controlled transshipment hubs.

The cooperation still has to be approved by anti-trust bodies in various jurisdictions including the U.S., Europe, and China.

The duo plans to file the final documents with the relevant authorities within the next few months, with hopes pinned on all approvals received in the third quarter of 2024. Based on the completed research, Hapag-Lloyd is confident that the corporation is fully compliant with the existing regulatory framework.

Unlike other alliances in the industry, this one has been dubbed ‘cooperation’ basically due to its more open operating model. It has no expiration date, as the duo plans to stay together for the ‘long run’.

On the legal side, the binding period for the partnership is 36 months, followed by a 12-month rolling notice period.

The decision of Hapag-Lloyd and Maersk to forge an operational cooperation deal is rooted in their recognition of the significance of shared business values and culture. Speaking yesterday in a press briefing Rolf Habben Jansen, CEO of Hapag-Lloyd, stressed the importance of a similar business culture of the two companies and mindset on two major points: reliability, and sustainability.

“We believe this will bring improved schedule reliability for our customers, competitive transit times, and very good coverage. We also believe that because the companies are very well aligned on the ambition to deliver better quality and accelerate decarbonization that that is an area where we will make more progress and that as two partners we should also be able to adapt flexibly to whatever is happening in the market,” Jansen said.

“On the sustainability front, we have to double down. It’s important to do our utmost to bring those emissions down and that means you have to work with a like-minded partner.”

Hapag-Lloyd attributes its decision to partner with Maersk to the company’s overarching strategy for 2030, where its mission of becoming the unequivocal leader in quality necessitates a significant enhancement in operational efficiency. The strategy includes three key targets: improving schedule reliability, cost competitiveness, and cutting emissions.

Hapag-Lloyd CEO underscored that progress in this direction over the past five years has been insufficient with its existing partners. Therefore, the move to join forces with Maersk is seen as a strategic step to accelerate progress and attain the ambitious goal of being the foremost industry leader in quality.

With that in mind, the German liner major ruled out a move into the integrated logistics solutions business, stressing its strategy to remain a pure-play-plus liner and terminal infrastructure player, and keeping its business essence unchanged.

Jansen sees the strategic alliance with Maersk as a key enabler of its schedule reliability improvement and a major opportunity to create scale to drive down costs.

He added that to have an efficient network at scale it was critical to have control over the hubs and the terminals, especially those where the transshipment will take place. The Gemini Cooperation will control five transshipment terminal hubs, which is a key difference in the partnership when compared to existing networks.

“All of the loops will have two to three main port calls per region, where they will also call the hubs. That means that the risk of delays will be significantly less and since we control the hub terminals we can also control priorities and waiting times,” he pointed out.

Commenting on the potential impact of the partnership on German ports, Jansen noted that the new setup is expected to strengthen the role of German ports.

“If we look at the Hapag-Lloyd’s cargo being handled in German post, we expect that once the network is fully rolled out that volume will be up to 20%. The ports in Germany that will benefit the most from that are Williamshafen and Bremenhafen due to more transshipment that will be done in Germany,” Jansen said.

As explained, Hamburg may experience a decrease in volume, but it is expected to be compensated partly with more transshipment from Maersk, resulting in an estimated 10% type of impact.

While addressing sustainability plans, Hapag-Lloyd’s CEO said that with Maersk these goals could be achieved quicker and more effectively with great strategic and operational alignment.

“If you want to bring your emissions down, then of course, we can do some of that by using more alternative fuels and other things. However, there is also something to be said about how you use your assets and how to reduce the overall emissions of the network as much as possible. When thinking about that, of course, one also thinks about what are the possibilities to do that together with others,” Jansen noted.

Hapag-Lloyd confirmed to Offshore Energy that it plans to integrate its LNG dual-fuel 24,000 TEU vessels in the collaboration. The company has a dozen 23,600 TEU containerships powered by LNG on order, which are set to be put into service by 2025.

Biofuels are a significant part of the company’s sustainability efforts, and the shipowner was scheduled to use more than 150,000 tons of biofuel in 2023.

That being said, the company has expressed openness to alternative fuels, stating that while LNG has been a significant focus, Hapag-Lloyd is actively looking into the potential of methanol and ammonia. With an eye on the future, the company believes that multiple fuel options will play a role in decarbonizing the industry.

On the other hand, Maersk has been a strong opponent of LNG as a transitional fuel for the maritime industry, due to its well-to-wake methane emissions profile.

“We all see that there are various alternatives to decarbonize and we all think that there’s not one way to get there,” Jansen commented when asked whether this topic was discussed with Maersk.

“Maersk (Net Zero 2040) and Hapag-Lloyd (Net Zero 2045) have the most ambitious decarbonization targets in the industry, and they remain unchanged. However, the new network aims to provide a more fuel-efficient setup that will reduce the greenhouse emissions per transported container already in 2025 and both parties are committed to continue to drive further efficiency in the years to come,” a Maersk spokesperson said in a statement to Offshore Energy.

“Maersk has set a Net-Zero greenhouse gas emissions target for 2040 across the entire business and has also set tangible and ambitious near-term targets for 2030 to ensure significant progress, and that remains unchanged. Since 2021, Maersk has had a policy of only ordering new vessels able to operate on green fuels. All 24 Maersk vessels currently on order will be equipped with dual-fuel engines and will be able to operate on green methanol,” the statement added, saying that Maersk could not comment on Hapag-Lloyd’s strategy for new vessels/fuels.

Nevertheless, both Maersk and Hapag-Lloyd CEOs joined a recent joint declaration issued at COP 28 calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO) to create the regulatory conditions to accelerate the transition to green fuels.

Hapag-Lloyd’s departure from THE Alliance is a significant development, as the German liner major had been planning to stay in the alliance by 2030.

The announcement took other members of THE Alliance by surprise, prompting inquiries into the departure. Hapag-Lloyd noted that they informed their partners in the alliance on the day of the announcement. Questions arose about potential compensation, with Hapag-Lloyd emphasizing its commitment to honoring all contracts until February 2025, and that its withdrawal had no legal repercussions.

Hapag-Lloyd clarified that the decision was not a result of dissatisfaction with existing partners. Instead, the move is seen as an opportunity to bring operational quality and schedule reliability to the next level.

He noted that in terms of capacity provision in the Alliance, Hapag-Lloyd’s contribution was comparable to ONE, providing around 25 % of capacity, while in the new set-up it will provide 40%, ensuring a staretgicaly more beneficial position for the company.

“We have made an agreement where both partners have equal rights, and we believe that with two partners it’s easier to make decisions than with four,” Jansen added.

The Gemini cooperation aims to achieve industry-leading schedule reliability above 90%, an Jansen is confident this is a realistic target.

“We believe that the 90% is doable, and that has a to do with the fact that that we will have a slightly different operating model, with much less ports on both ends than most of traditional corporations, and a stronger role for the hubs that we by and large control. So we believe that that’s a realistic target,” he pointed out.