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South Korea’s K-Alliance to launch in 2021

Five South Korean liner operators will codeshare on services to Southeast Asia in Q2 2021, after acceding to a request by the Ministry of Oceans and Fisheries (MOF).

Tentatively called the K-Alliance, the codesharing arrangement was signed on 23 December 2020, between the ministry, HMM, SM Line Corporation, Pan Ocean, Sinokor Merchant Marine and the latter’s subsidiary, Heung-A Line.

Due to a resurgent Covid-19 wave in South Korea, the agreement was signed through video-conferencing.

Southeast Asia is emerging as a global manufacturing base, particularly in Vietnam, and this region has potential cargo growth. However, with 14 liner operators in South Korea, competition is keen.

The K-Alliance signing ceremony. Credit: MOF.

MOF estimates that South Korean liner operators’ combined market share of the South Korea-Southeast Asia route is 40%, out of total capacity of 480,000TEU, but this is at risk because of mainline operators’ aggressive expansion.

It is not the first time that the government has sought to cool what it sees as an overheated local container shipping industry.

In 2017, the MOF engineered the formation of the Korea Shipping Partnership (KSP), a quasi-alliance of all 14 of South Korea’s liner operators. However, this attempt is widely viewed as unsuccessful, as the liner operators lack the determination to avoid service duplications.

However, MOF did not oblige the liner operators to join K-Alliance, which aims for cost savings by deploying eco-friendly modern ships, and joint usage of port facilities and containers.

The ministry said, “It’s the first attempt to form a service alliance consisting of only South Korean carriers to reap economies of scale. Other operators are welcome to join in at any time, in consultation with existing member companies.”

Martina Li
Asia Correspondent

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