2M GLOBAL SHIPPING ALLIANCE : COMING TO AN END

Maersk and MSC are ending the 2M global shipping alliance. The pact will conclude in 2025. A.P. Moeller-Maersk and Mediterranean Shipping Co., the creators of the 2M alliance, are ranked the world’s two largest shipping lines. They would end their vessel-sharing partnership as the industry faces reduced demand and lower freight rates.

2M Global Shipping Alliance

• 2M is a container shipping line vessel-sharing agreement (VSA)
• It was introduced in 2015 by Maersk and MSC with the aim of ensuring competitive and cost-efficient operations in the Asia-Europe, Transatlantic, and Transpacific trades.
• The 2M agreement has a minimum term of 10 years with a 2-year notice period of termination.

Reasons for the End of the Alliance

The decision to wind down the 2M alliance comes as shipowners are dealing with

• A drop in cargo and excess vessel capacity has pushed freight rates to pre-pandemic levels. According to operators and charterers, container volumes across the Pacific are down about 30% in January compared with last year.
• Shift of balance of power back to customers of these alliances. Customers had complained to regulators the
  alliances were anti-competitive. Big cargo owners such as Amazon.com Inc. and Target Corp. are securing ocean freight rates about one-third less than last year’s contracts.
• Retailers not securing a spot-on vessel: Retailers that import large volumes of goods typically sign fixed-term
  contracts with ocean shippers to avoid uncertainty in deliveries, and they are not doing this anymore. Some importers are now opting to pay market rates instead of securing fixed-term contracts.
• Changes in the retail scenario: Retailers have scaled back imports. The sales during the holiday season have become weak. Apart from this, they have to deal with bloated inventories.
• Return of pre-pandemic days: Ocean freight has normalized, and the ports have normalized. Most in-transit issues and all the penalties have also been reduced. The retailer’s chief operating officer, John Mulligan, of Target, said in November that container rates had come down by one-third and that they would come down further.
• Looming uncertainties: The uncertainty has cut down the duration of fixed-rate contracts. Shipowners are offering from one year to as short as three months contracts. Pricing will be under pressure for shipowners this year, while cargo owners are getting discounted rates.

“It’s very unpredictable for our customers and us,” Maersk CEO Vincent Clerc said in a December interview. “We made significant capacity adjustments, but the inventory corrections can take a few months.

Future of the Alliance Partners

The 2M alliance had established a behemoth in the industry when it was created in 2015. Maersk and MSC can each independently move over 4 million TEUs through a combination of owned and chartered ships, according to Alphaliner data. 2M was instrumental in stabilizing the fragmented container market.

Following the creation of 2M, similar partnerships were formed- the Ocean Alliance and THE Alliance. The three groups account for about 75% of global container – shipping capacity, according to data company Statista. The winding down of 2M has raised questions about the future of the other two alliances.

As for Maersk and MSC, terminating the agreement will allow both companies to continue to pursue their strategies. Maersk has been focusing on becoming an end-to-end logistics operator with an emphasis on inland supply services, while MSC has overtaken Maersk in the number of ships it operates, sharply building up its fleet. MSC now has the scale to service all its customers on its own.

“Even if 2M formally runs until January 2025, it should be expected that Maersk’s and MSC’s networks on the alliance trades will begin to deviate even more in 2023,” said Lars Jensen, CEO of Denmark-based Vespucci Maritime.

In a joint statement, CEO Vincent Clerc of A. P. Moller – Maersk and CEO Soren Toft of MSC said: “MSC and Maersk recognize that much has changed since the two companies signed the 10-year agreement in 2015. Discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies. The companies acknowledged the commercial environment that led to the union in 2015 has changed — particularly as the carriers pursue new strategies.

Their alliance, however had defined the market for nearly a decade.

CSS GROUP REGISTER COME BACK EMERGING CHAMPIONS

CSS Group once a Champion name in UAE domestic cricket arena, come back emerging Champions at the recently concluded JMR Sporting Emerald Cup Season 9.After a long vacation from the tournaments, CSS Group decides to recapture its glittering glory, and this start winning a Championship is encouraging for all.

Played at Sharjah, the finals were between Consolidated Shipping Services CSS v/s Oasis Cricket Club OCC, and the former lifting the title at the end of a thrilling finale with a margin of 20 runs. Winning the toss and elected to bat first, CSS scored 193 for the loss of 8 wickets in this 20 overs limited tournament, and restricted OCC at 173 for 8, exhibiting a comprehensive team display.

CSS remained unbeaten all through the tournament where the team played a total of 7 matches, winning 6 matches and 1 match was cancelled, with points shared.

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BOUNCED CHEQUES AND THE LATEST AMENDMENTS IN THE UAE

The new amendment to Federal Law No. 18 of UAE’s Commercial Transactions Law, 1993, regarding the decriminalization of bounced cheques and the partial payment of cheques, took effect from January 2, 2022, as per the directive of the UAE Central Bank. These changes align with the practice in countries such as France and the USA. Being a criminal offense before the amendment, the modifications have been enacted to make it a civil offense where people can discuss and settle the case amicably.

Cheques returned due to insufficient funds ha been decriminalized to a large extent, and criminal liability will only accrue in cases where the cheque has been issued for an illegal purpose, bounced as a result of being delivered in bad faith, or as a result of fraud or forgery, or has been deliberately written or signed in a way that makes them untenable. It may also accrue criminal liability if proven that:
1. The drawer had ordered the bank not to cash the cheque before the due date;
2. The drawer had closed the account or withdrawn the available balance before the due date.

Moreover, the previous beneficiaries of bounced cheques must notify a police station regarding the situation, providing details of the drawer, drawee, the cheque, and the bank where it was to be cashed. Before visiting a police station, the complainant should first ascertain in which area of the city the cheque was first submitted for clearing, as it is the police station in the corresponding area where the cheque was first submitted that shall have jurisdiction over the complaint.
Once the complaint is accepted, after review of the original cheque along with the return memo and other relevant documents, the cheque issuer, or the counterparty, in this case, will be notified by the police to come to the station for questioning. Once the police record the statements of all parties involved, they will prepare their report, and the complaint will be transferred to the Public Prosecution. The Public Prosecution has exclusive jurisdiction to initiate and prosecute criminal proceedings under AED 200,000/- by issuing a fine only. For cheque amounts over AED 200,000/-, the Public Prosecution will have to transfer the case to the criminal court for their review. If the amount is less than AED 200,000/-, then the case would be transferred to a civil court that could force him to pay the amount mentioned in the cheque along with a fine. At this point, the courts would determine whether or not an element of bad faith existed.

On the contrary, the new amendment enables the beneficiary to directly approach the court’s execution judge, after obtaining a certificate from the bank, to order payment of the full or partial payment of the cheque’s value or even enforce the right to seize the drawer’s assets, in an accelerated and easy procedure that preserves the rights of all parties involved. To that extent, partial payment of cheques has also been made mandatory, with the bank required to pay the drawee the partial amount if the amount in the account is less than the value mentioned in the cheque unless the drawee rejects such payment. In such cases, the bank shall follow the protocols for partial payment of Cheque value, as stipulated in the new amendment law.
As part of the changes, administrative penalties for issuing cheques without funds will also be toughened, including withdrawal of checkbooks from the transgressor, denying them the right to receive new checkbooks for a maximum of five years, and suspending their professional or commercial activity.
This move to amend the Commercial Transactions Law that decriminalizes bounced cheque cases are expected to come as a huge relief to hundreds of businesses that earlier had to pay hefty fines at risk of imprisonment without trial in the UAE.