Germany-based Hapag-Lloyd AG (DE:HLAG) agreed to partner with Denmark’s A.P. Moller-Maersk A/S (DE:DP4H) in a move to transform the global shipping landscape. As part of the deal, both companies formed Gemini Cooperation, which will start its operations in February 2025. The new partnership aims to establish a huge network with an “ambitious” goal of transporting 3.4 million containers and achieving a schedule reliability rate of over 90%.
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Hapag Lloyd shares were down by 0.063% at the time of writing today. Hapag-Lloyd is one of the top five shipping and logistics companies in the world.
New Partnership Disrupts Shipping Alliances
Shipping alliances are agreements between shipping companies that allow collaborative sharing of space on each other’s ships. As a result of the new partnership, Hapag-Lloyd will exit THE Alliance (one of the largest shipping alliances between the company and three other entities) by the end of January 2025. Maersk, on the other hand, previously announced that it would leave its 2M alliance with Mediterranean Shipping Co. in January 2025.
The unexpected departure of these companies from their respective alliances has caught the industry off guard, placing the remaining members in the spotlight. Both Hapag and Maersk are the leading members of these alliances, with significant control over the fleet. Consequently, this further opens the possibility of changing partnerships in these alliances, with the remaining members facing challenges in maintaining their current operational scale.
Meanwhile, the newly formed collaboration will involve a fleet pool of approximately 290 vessels. Maersk is set to contribute 60%, while Hapag-Lloyd will contribute 40%.
Is Hapag-Lloyd a Good Investment?
As per the consensus among analysts on TipRanks, HLAG stock has been assigned a Strong Sell rating based on nine Sell and two Hold recommendations. The Hapag Lloyd share price target is €102.82, which is 35% below the current trading price.
