Commentary Trading Places

By Peter Tirschwell

Gemini has tacked away from the fleet with an offering that aligns its interests with that of customers.

Most ocean carriers are privately all too happy to accept, even at the expense of frustrated customers, a pattern consisting of external shocks wreaking havoc, system-wide capacity being effectively withdrawn due to port congestion, longer transits or redeployed tonnage, and rates and profits going up.

For carriers that struggled financially for decades, these recent problems— beginning with the COVID-19 pandemic and continuing with the Red Sea security crisis, Panama Canal restrictions, tariffs, growing global port congestion, and most recently, a flare up of hostilities between Israel and Iran— are good problems to have.

But how long can it last? And what happens when the party’ s over?

The private view of carriers— that customers contributed to their years in financial purgatory— makes them minimally sympathetic and increasingly willing to do their part to hit the brakes on capacity. Carriers went from having virtually no ability 25 years ago to pull capacity to embracing slow steaming, idling, blank sailings, and in the case of some carriers, buying versus chartering and thus controlling tonnage.

Carriers“ do not want to change the practices of [ port ] omissions, slow steaming, cut-and-runs, demurrage and detention,” said one knowledgeable observer who asked not to be identified.“ They like disruptions and are not eager to move to a model where cargo is delivered as booked.”

Years such as 2024 and 2025, which were supposed to be awash in red ink for carriers, suddenly became profitable. But carriers must wonder how sustainable the“ disruptive” model is.

Need for competition

The weakness is obvious. The pandemic could well have been a fluke, a once-in-a-century catastrophe; the Red Sea could reopen at any time and the US and China are taking steps toward a trade truce. Port congestion and its impact on end-to-end capacity could ease as global growth, including trade growth, slows due to US tariffs.

And all the while overcapacity looms thanks to a massive ordering spree during and since the pandemic. JP Morgan noted last month that“ industry dynamics remain unfavorable given structural oversupply, despite near-term disruption boosting short-term rates.”

Thus, carriers could soon be facing a market in which they will need to be competitive. Rates will find a level commensurate with supply and demand, but what about service?

In a purely commoditized market, rates alone are enough to attract cargo. But what if there is meaningful differentiation in schedule reliability beyond the few niche carriers such as Matson, UWL / Swire and Tailwind?

Regional Asian carriers serving mostly a forwarder market tell us they feel no pressure to improve schedule reliability, other than to avoid embarrassment when reliability rankings are published. Other carriers have long been only somewhat concerned about reliability, understanding that shippers are diverse, with a great many prioritizing price over transit time, and options are few as carriers consolidate.

Gemini as a model

But not all think this way. Maersk and Hapag- Lloyd in their Gemini Cooperation alliance have tacked away from the fleet with an offering that, instead of relying on disruption for profits, aligns their interests with that of customers. If it works, it won’ t just be price, trade lane presence or longstanding partnerships that determine where shippers direct their cargo. It will be results.

The initial success of Gemini’ s hub-and-spoke network in hitting its 90 % reliability goal drives the point home; it was 90.7 % in March and April, including both origin and destination arrivals, according to Sea-Intelligence Maritime Analysis.

“ The effect of Gemini is really interesting,” industry veteran Per Starup Sennicksen wrote on LinkedIn.“ Many old timers, who condemned the hub-and-spoke network model, will have to change their opinions.”

Is the wider industry noticing? It is premature to say whether Gemini is influencing other carriers, but carriers plowing investment into terminals on a global basis show the need for greater end-to-end control.

“ I can’ t say we’ ve seen any real effort from competing alliances and carriers to up their game, from a purely operational angle,” said Simon Sundboell, CEO of eeSea, which monitors carrier schedule reliability.“ What I can confirm, though, is that we’ ve had real interest in understanding the reliability methodology and numbers from several of the major carriers in just the past two months, as well as from cargo owners and logistics providers, so it’ s on the radar out there.”

Could it be that out of the chaos of the past five years, real value will emerge?

email: peter. tirschwell @ spglobal. com

54 Journal of Commerce | July 7, 2025 www. joc. com