Tuesday, June 18, 2013

Big 3 Box Freight Carriers Join in Largest Ever Container Shipping Alliance and Central Control

Maersk, MSC and CMA CGM Agree Full East - West Trade Cooperation
Shipping News Feature

WORLDWIDE – In a move which many in the freight and supply chain, not to say regulatory agencies, will view with some surprise, if not perhaps suspicion, the big three box carriers, Maersk, MSC and CMA CGM, have launched a ‘long term alliance’ which will see them combine their individual container shipping services into a rationalised set of routings on all the major East – West trade lanes across Asia – Europe, Trans-Pacific and Trans-Atlantic to be called the P3 Network. This move represents largest ever TEU cargo cooperation ever undertaken.

The move to ever larger container vessels has left many wondering about the viability of some shipping lines as the continued overcapacity on services is set to worsen as more of the 16,000+ TEU ships are ordered and launched. This move is seen as an attempt by the biggest three container carriers to consolidate their efforts and brush off smaller competitors with more stable, frequent and flexible services.

The P3 Network will operate a capacity of 2.6 million TEU (initially 255 vessels on 29 loops) on the three trade lanes with the three lines continuing to have full individual control over sales and marketing yet the services will all have a common command centre operating joint vessel schedules. Each of the lines will offer more weekly sailings in their combined Network than they do individually. As an example, the P3 Network plans to offer 8 weekly sailings between Asia and Northern Europe. In addition the P3 Network will offer more direct ports of call.

The declared objective of this latest, major move, is to keep the clientele happy by reducing the number of cancelled sailings and port calls by ensuring a guaranteed schedule and the three carriers have pointed to other recent alliances such as the G6 and CKYH undertaken to minimise the disruption caused by too little cargo for too many ships, whether the regulatory authorities in the US and EU will view this in the same light remains to be seen but the lines are confident that by only concentrating the scheduling administration in one command centre, whilst individual tariffs are negotiated by each, does enough to comply with the regulations.

Starting date for the new arrangement is set for Q2 in 2014, subject of course to regulatory approval and the signing of definitive contracts which is scheduled to take place before the end of 2013 but negotiations between the carriers must be close to full settlement for the announcement to be made. As befits their relative positions in the trade, Maersk will operate about 1.1 million TEU capacity (42%) on the services, MSC 0.9 million TEU (34%) whilst CMA CGM gets 0.6 million TEU (24%). Chief Trade and Marketing Officer in Maersk Line, Vincent Clerc, commented:

“We are pleased with this principal agreement to establish the P3 alliance with CMA CGM and MSC. In recent years, Maersk Line has taken many initiatives to improve on the customer and products side and this alliance will be yet another step in this drive. It will provide our customers on the main trades with attractive, stable services and our Triple-E vessels will be implemented in the network without adding to the overcapacity on Asia-Europe. Fuel consumption will also be reduced with significant benefits for the environment, and our operations will get even more efficient and competitive.”