Commentary Trading Places

By Peter Tirschwell

A market exists; the question is how big.

More than nine months into the Gemini Cooperation’ s journey— possibly the most radical reinvention ever attempted in container shipping— two things are becoming clear: stated schedule reliability that is well above industry averages has largely been achieved and doubts about its sustainability are fading. A hub-and-spoke network able to keep feeder ships filled is lowering costs, mimicking the common-feeder model in place for decades in Asia and other regions. The one big unanswered question that remains is whether, or to what extent, premium revenue can be extracted from shippers by Gemini partners Maersk and Hapag-Lloyd. Maersk, during its third-quarter earnings presentation, provided the clearest picture to date on that very question.

CEO Vincent Clerc said he believed premium pricing is coming, but that trust in Gemini’ s reliability needed to be more firmly entrenched beyond the standards established thus far.

“ We need to be certain that we have a long enough track record that it unlocks value for them [ shippers ], that we can then capture some of that value for us,” Clerc told analysts.

But a tantalizing possibility may be emerging: It might not actually matter.

The reason is that while premium pricing has long been elusive for ocean carriers, the cost benefits from Gemini may themselves prove to be enough to justify overhauling the network. Maersk cited annualized cost savings of $ 720 million to $ 950 million through the implementation of the Gemini network as a result of lower bunker costs and greater asset utilization.

This is coming from higher utilization of ships and shorter sailing distances, which resulted in 6 % higher capacity but 3 % lower total fuel consumption. Running ships at a higher utilization in the network, Clerc said, allows the carrier to transport more volumes at the same capacity. Carriers such as Singapore-based X-Press Feeders and Bengal Tiger Line handle large carriers’ feeder volumes by keeping costs lower through higher utilization than the carriers have been able to achieve on their own.

On the cost structure, Clerc said Maersk is“ opening up a gap now with Gemini that is going to be... quite handy, especially in the current rate environment.”

“ It’ s a pretty significant lever that we have unlocked here,” stemming in part from using“ fit-for-purpose shuttles rather than underutilized mainliners,” he added.

The revenue side is less clear. It is unclear how much of a premium revenue opportunity exists by offering high schedule reliability. In prior eras, carriers invested significant sums in fuel to stay on schedule only for a weak market to undercut their argument for premium rates. Indeed, whether investing more in fuel to keep ships on schedule, deploying 53-foot ocean containers to allow customs to load more cargo or departing every day on time as was envisioned in Daily Maersk, there has been little in terms of premium pricing over a period of decades to show for it.

A market exists; the question is how big. High-reliability, premium-priced services from Matson, UWL, Zim Integrated Shipping Services and Tailwind on the Asia – Europe trade point to a segment of the shipper market able to capture supply chain value from reliable schedules. In limited cases, large shippers have shown themselves willing to pay a premium for preferential stowage, leading to expedited movement of containers off the ship and through the terminal, including for so-called peel-off stacks.

The Gemini partners, however, believe a fundamental value proposition continues to exist by enabling customers to slash costs by reducing inventory.

“ I am optimistic that if someone can remove $ 10 million a day and save two weeks in that, that I can get a premium,” Stuart Sandlin, Hapag-Lloyd’ s regional president for the Americas, told the South Carolina International Trade Conference on Oct. 29.“ I candidly think [ Gemini is ] a premium product and should command some sort of premium price.”

As Clerc put it on the earnings call,“ Today, every customer has a buffer stock and that reliability needs to unlock a reduction of that buffer stock. They need to trust that [ Gemini ] has weathered sufficient ups and downs and is steady [ so ] that they can take out some of that buffer stock. And if they do, they pocket that savings and then we can capture some of it in form of a premium.”

For Maersk and Hapag-Lloyd, the Gemini network fits respective strategies and approaches to the market. It harks back to hub-and-spoke networks of an earlier day and is true to Maersk’ s historic DNA of running on time, a source of tension within the former 2M alliance with Mediterranean Shipping Co. For Hapag-Lloyd, it can’ t promote itself as the best major carrier in terms of service quality, its stated objective, and not run on time.

email: peter. tirschwell @ spglobal. com

54 Journal of Commerce | December 1, 2025 www. joc. com