European Shippers Council urges US to regulate 2M alliance

European Shippers Council urges US to regulate 2M alliance

The European Shippers Council (ESC), which represents European importers and exporters, has said it wants the US Federal Maritime Commission (FMC) to make sure the 2M alliance does not lead to increased freight rates.

The 2M alliance is a proposed deal between the world’s two largest shipping companies, Maersk and Meditteranean Shipping Company which would lead to cooperation and cost savings on the Transatlantic Transpacific and Europe-Asia routes.

ESC chairman Denis Choumert said, in a letter to the FMC, reportedly seen by the Wall Street Journal: “The gathering of the two first ship operators will create a huge player that will be in a position to have such power that they can distort the market for the purpose of price increases.”

The alliance would control 35% of the Asia-Europe loop, 37% of the trans-Atlantic route and 15% of the trans-Pacific route.

Choumert continued: “Allowing these two operators to discuss and agree on some core parameters of the services can lead to a decrease of the competitive environment of the trade…lead to a decrease in the number of direct calls, a decrease in service quality and surely an increase in price.”

In July, shipper councils from Singapore, China and Hong Kong expressed similar sentiments.

Specifically, the ESC wants the FMC to impose a monitoring system examining available container capacity relative to freight charges and assurances that shipping companies will notify the ESC’s members in advance of any changes affecting capacity.

The FMC is currently considering a request for approval of the alliance and one of its members, William Doyle, said recently that he is considering making an early warning system, designed to “detect capacity issues and market problems”, a condition of approval.

An earlier proposed alliance between Maersk, MSC and CMA CGM was vetoed by Chinese regulators last year as they felt it would unacceptably diminish competition.

Chinese and European regulators will also have a say in the approval process but Maersk and MSC have previously argued that they only need the approval of the US regulator.

Chinese and American regulators will meet in Shanghai in November and a decision is expected by late November.