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THE Alliance creates first liner emergency fund in the wake of Hanjin’s demise

With just over three weeks till kick off THE Alliance today announced its final network after all needed preparations have been finalised. The new container grouping said its 32 services connecting 75 ports on more than 240 ships will use a “best ship for the loop principle” and a dedicated shuttle service design on the main east-west tradelanes. The new group comprises Hapag-Lloyd, K Line, Mitsui OSK Lines, Nippon Yusen Kaisha and Yang Ming.

Moreover, with Hanjin’s collapse still fresh in many shippers’ minds, the members of THE Alliance have also revealed a contingency plan in the event a member of THE Alliance suffers a bankruptcy.

The five member lines will establish an independent trustee to manage funds to be used in the case there is insolvency within the group. It is envisioned that the fund will be used to continue alliance operations in the event of insolvency of one or more member lines. The independent trust fund will guarantee that customers’ cargo on board of the affected members’ ships will be carried to the port of destination.

“Customers’ reaction to the incident last summer,” the group said in a veiled reference to Hanjin, “showed a clear demand for such a safety net and the partners of THE Alliance are proud to present the first contingency plan of its kind in liner shipping.”

When Hanjin sought court protection at the end of last August it left around $14bn of goods stranded on ships across the globe. In the intervening months many senior names in shipping have stressed the need for the sector to make their own emergency funds to avoid the supply chain chaos caused by another liner collapse.

For instance, William Doyle, a commissioner at the Federal Maritime Commission in the US, said at this year’s TPM liner event in Long Beach: “There needs to be funds to create safeguards – companies may fail but it is everyone’s responsibility to make sure that what happened last year never happens again.”

Splash Opinion writer Tobias Koenig, meanwhile, wrote last September on the need to create a global container rescue fund in the wake of Hanjin’s demise.

April 1 sees container shipping enter a new era with THE Alliance starting as well as the Ocean Alliance, another new grouping featuring Cosco, OOCL, Evergreen and CMA CGM.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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