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There are mixed feelings over the potential benefits of the planned P3 alliance by Maersk, MSC and CMA-CGM, scheduled to start in the second quarter of next year.

Support and challenges for P3 Alliance

While the US Federal Maritime Commission (FMC) delayed its decision, due earlier this month, by asking for additional information from the parties, the European Commissioner for Transportation, Siim Kallas, has given the alliance his support.

Coinciding with the FMC’s delay, the G6 Alliance announced expansion on the Asia-North America West Coast and Trans-Atlantic trade lanes, ironically setting the commencement date as Q2-2014, the same as that for the P3!

The FMC has said that following submission of the required information, a new 45-day regulatory review period will begin.  Its position acknowledges the request by the Global Shippers’ Forum (GSF) to investigate and scrutinise the proposed alliance.

Questions raised by the GSF focus on demonstrating whether there will be a reduction in competition, thereby producing an unreasonable reduction in transportation service or an unreasonable increase in such costs.

“Shippers still lack basic information from the P3 about sailing schedules and how services will affect production and distribution.  It is absolutely necessary for extra evaluation time regarding the competitive impact of the P3,” said Chris Welsh, the GSF secretary general.

He added that P3 goes beyond normal vessel sharing agreements in terms of its scale, scope and operational arrangements.  “The ‘game changing’ nature of P3 is underlined by the response by the G6 alliance and others. We are potentially looking at a fundamental change in the structure of the global liner market and the wider competitive environment for shippers,” he said.

The GSF had previously also submitted detailed questions to the European Commission Competition Directorate in Brussels, asking for a formal investigation.   According to the European Shipper’s Council (ESC), P3 might bring efficiencies and other benefits to the market, but that it could also jeopardise the free freight transport market.

In an interview with ShippingWatch, Kallas believed P3 could bring a number of benefits to world trade, including providing a ‘counterstrike’ against the increasing shipping dominance of China.

He argued that it is a ‘good idea’, strengthening European shipping against fierce global competition, especially from China, which seeks to maintain a strong maritime sector.  In this context he sees P3 as the only way to ensure the position of European shipping.

As if to support this position, the European Commission opened an investigation last month (November) into 14 container shipping lines, including majors from Europe and Asia, for allegedly influencing prices for European routes in breach of competition rules.  It comes as the global industry struggles with vessel oversupply and weak demand due to the economic downturn.

While supporting the alliance, Kallas questions how it will impact on ports, not least those in Europe, where he considers they could be forced to lower prices.  “The only issue is how this alliance will act in European ports. We will probably have to guarantee fair competition to make sure that such a big volume will not force ports out of the market,” he said.

Although the EU is not required to approve the formation of the P3 alliance, it will be represented at the Competition General Directorate summit in Washington on Tuesday (December 17).

In support of its move, the G6 claims that its expanded cooperation will provide more service choices and increased sailing frequency.  Each member on the Asia-North America West Coast trade will be able to offer almost twice as many sailings, compared to that currently offered separately by The New World Alliance and the Grand Alliance.

“With greater service flexibility and operational synergies, the G6 Alliance will have an even more resilient and robust network – giving shippers wider coverage and shorter transit times, without reducing total capacity,”  member carriers said in a statement.

The G6 plans to provide a network comprising all East-West trade lanes deploying a total of about 240 vessels connecting 66 Asian, American and European ports.