Wednesday, June 4, 2014

Container Shipping Alliances Get Tacit Approval from Legislators and Freight Forwarding Groups

Not So Much an Innocent Verdict as a Probationary Sentence from European Commission
Shipping News Feature

US – EUROPE – ASIA – With the host of anti-trust prosecutions and disgraced cartel activities which have plagued the freight industry, from air cargo operators to forwarding agents over the last few years, it is no surprise that the new container shipping alliances, which are currently in vogue as a protection against the vagaries of the ocean trade, have been looking nervously around whilst they appeal like Oliver Twist before the Beadle to various authorities around the world for permission to operate.

With the days of Conference Lines now a distant memory the latest proclamation from the European Commission, whilst at first apparently seeming positive, can hardly be called clearance to trade for the box carriers, reading more like turning a temporarily blind eye than a royal assent. The G6 Alliance, a motley crew including Hapag Lloyd, Hyundai Merchant Marine (HMM), Mitsui OSK Line (MOL), APL, OOCL and NYK drew the beady eye of Mordor from Brussels over two years ago, since when we have seen the world’s three biggest container lines (Maersk, MSC and CMA CGM) create the P3 Alliance causing a further ripple of interest.

The P3 members were required to conduct a self-assessment and, since its conclusion, the partners have been in voluntary discussions with the European Commission to confirm the Alliance’s own view of P3 being in compliance with EU competition law. The EU response is hardly a ringing endorsement of the Alliances legality however sounding more like probationary sentence than a declaration of innocence with Antoine Colombani, Commission spokesman for competition policy, saying:

"At this stage, the Commission does not intend to open proceedings in relation to P3 or G6. The Commission will follow market developments and will remain vigilant as regards any risks for competition that may arise from the implementation of P3 or G6. The Commission will consider intervening if necessary.”

The EU attitude seems to have struck the right chord however having been met by parties on loosely opposing sides with a degree of acceptance. Vincent Clerc, Chief Trade and Marketing Officer, Maersk Line, said:

“In our self-assessment we concluded that the P3 Network is in compliance with the competition law in the European Union. We are pleased with the Commission’s communication and that they have decided to not open proceedings. We will now continue our close cooperation with competition and maritime authorities in amongst others China and South Korea to obtain their approvals.”

The Global Shippers Forum (GSF), which represents a raft of shippers and forwarders and is seen as one of the main objectors to Alliances in principal, also gave a cautious welcome to the attitude of the Commission saying it welcomed EU surveillance of the P3 network which will see around two hundred and fifty container vessels of all sizes operational on the world’s major trade routes whilst nominally under one central control. The GSF however was at pains to point out that it would ensure that the carriers followed through on their guarantees of service whilst eyeing the cost of shipping, and confirming it would be quick to report any perceived transgressions back to Brussels.

With P3 offering services on both Trans Pacific and Atlantic routes plus the trade lanes between Asia and Europe the G6 were quick to announce plans to expand the current scope of services in December last year, in an effort to compete with the then proposed P3. The group of six had a more positive response from US authorities when in April the Federal Maritime Commission (FMC) gave its blessing to expansion just a few days after the FMC gave P3 the go ahead. The G6 Alliance currently employs around 80 vessels and now aims to eventually provide a network comprising all East-West trade lanes deploying a total of about 240 vessels connecting 66 Asian, American and European ports as opposed to the forty or so currently served.