This article first appeared in The Edge Financial Daily, on May 17, 2016.

KUALA LUMPUR: A new shipping alliance, which sees German container shipping firm Hapag-Lloyd team up with five Asian companies, would not have any significant direct impact on Malaysian ports for now, said Westports Holdings Bhd chief executive officer (CEO) Ruben Gnanalingam.

“It is still too early to tell how this new alliance will impact the industry because we don’t know what exactly is being planned for THE Alliance. It usually takes them about three to four months to formulate their plans,” he told The Edge Financial Daily yesterday.

Last Friday, it was reported that Hapag-Lloyd, Japan’s Nippon Yusen Kaisha, Kawasaki Kisen Kaisha and Mitsui OSK Line, South Korea’s Hanjin Shipping and Taiwan’s Yang Ming Marine Transport Corp will form a new alliance to save costs.

“THE Alliance will only be effective in April next year, so the details will only be out later, maybe in October 2016 or January 2017,” said Ruben.

He pointed out that another shipping grouping called 2M, made up of Maersk and Mediterranean Shipping Co, was only effective in January last year, although details of the collaboration were revealed in October 2014.

Asked if THE Alliance would have an impact on Westports itself, Ruben said none of its clients are involved, but added that one of its customers, United Arab Shipping Co (UASC) could potentially join THE Alliance.

He said that UASC is currently in talks with Hapag-Lloyd for a merger.

“UASC is currently in talks with Hapag-Lloyd regarding a merger. We will only know whether UASC will be a part of THE Alliance after the talks are concluded and only then will we be able to assess the impact on our operations,” he added.

Kenanga Research analyst Marie Vaz noted that the announcement of THE Alliance came on the heels of another alliance called Ocean Alliance, comprising CMA CGM, China Cosco Shipping, Evergreen Line and Orient Overseas Container Line, which will also come into effect in April 2017.

She added that large alliances will translate into the deployment of larger container ships, which require larger cranes, longer berths and deeper waters, which Westports is able to cater to.

“We believe Westports will not lose market share as it is able to accommodate most of the shipping liners’ requirements in terms of deep water, larger cranes and longer berths,” she said.