Global News HMM plans for THE Alliance revamp with SM Lines trans-Pacific slot deal

HMM and its smaller South Korean rival SM Lines will begin a slot exchange agreement on trans-Pacific services in June that will give both carriers increased access to load ports in China and Southeast Asia.

The tie-up, unveiled Thursday, is also part of a wider move by individual carrier members of THE Alliance to broaden their respective networks while maintaining THE Alliance commitments without the need to add a replacement carrier to succeed Hapag-Lloyd, a senior shipping executive said.

The move is notable because it’s the first time HMM and SM have cooperated on trans-Pacific services. The agreement will take effect June 7 and expires on April 30, 2025, according to a filing the carriers made to the US Federal Maritime Commission (FMC).

“The slot swap agreement allows the carriers to expand their network options, providing more options for their customers, while HMM, especially, looks for ways to expand and improve its product offering with the imminent departure of Hapag-Lloyd,” a senior maritime executive with knowledge of the deal told the Journal of Commerce.

Hapag-Lloyd will leave THE Alliance early next year to form the Gemini Cooperation partnership with Maersk. That will leave HMM, Ocean Network Express (ONE) and Yang Ming as the remaining members of THE Alliance.

“With changes coming to the THE Alliance with Hapag’s departure, HMM sees [the SM deal] as an opportunity to explore all options to be able to expand its network while continuing to be committed to THE Alliance,” the carrier executive, who did not want to be identified, said.

The source pointed out that similar non-THE Alliance agreements have been made early this year. These include HMM agreeing with ONE to slot charter space on its West India North America Express (WIN) service, which launches later this month, and the joint Wan Hai Lines-ONE Asia Pacific 1 (AP1) service.

“We expect to see a lot more of these one-off agreements coming forth,” the source said. “THE Alliance doesn’t necessarily need to add a carrier into the fold to replace Hapag-Lloyd. One-off agreements, possibly including those in other alliances, can serve the purpose.” Expands load ports for both carriers According to their joint FMC filing, HMM will initially provide 300 TEUs to SM Lines on each weekly Pacific Southwest Express (PSW) round-trip voyage. SM Lines will allocate a similar volume to HMM on its China Pacific Express (CPX) service.

This can be increased to as many as 1,000 TEUs or reduced to as few as 100 TEUs “at any time” without amending the agreement, according to the FMC filing. The agreement also allows both carriers to purchase additional space on an ad hoc basis.

The pact also significantly expands the number of load ports in Asia for both carriers.

For HMM, the slot agreement adds calls at Ningbo, Shanghai and Qingdao and Kwangyang in South Korea on SM Lines’ express CPX service, which has a 13-day eastbound transit from Ningbo to Long Beach and 15 days from Shanghai.

SM Lines can load its own cargo in Hong Kong, Yantian, Vung Tau in Vietnam and Laem Chabang in Thailand on HMM’s PSX service. There are further discharge/load options for SM Lines on the North American west coast, with calls at Los Angeles, Oakland, Seattle and Vancouver.