Sources within the carriers of the P3 Network, which comprises Maersk Line, Mediterranean Shipping Co. and CMA CGM, said this week that they have no clear indication when a decision would come down. One said the best guess at this point was that a decision would come in June, which would be at the end of the second quarter, which was when the carriers originally said they wished to launch the alliance. But approval is not a certainty, with one source putting the odds for approval no higher than 50-50.
The proposed alliance, which would initially involve 252 vessels totaling 2.6 million TEUs on east-west routes, would be the world’s largest-carrier alliance. Since the ships operated by the P3 would be larger on average than ones operated by the other major alliances, the G6 and CKYHE, it would put the carriers at a cost advantage over most of the rest of the industry.
The proposed alliance is being reviewed by the Transportation and Commerce Ministries.
“China’s Ministry of Transport has no problem with P3, and is waiting for the comments from the Ministry of Commerce, which does not have a timetable,” said Qi Yinliang, founder of ship.cn, China’s largest shipping industry media, based in Shanghai. Representatives of Chinese carriers had previously said they believe the alliance will be approved in China.
Several shipper groups, including in China, have expressed concern over the market power the three carriers would wield in the market. The P3 would control 42 percent of Asia-Europe capacity, 24 percent of trans-Pacific capacity, and 40 to 42 percent on the trans-Atlantic, according to the FMC.
“Members of the P3 said they will compete and will not be a monopoly, but in our experience this is not the story,” said Jiaxiang Cai, vice president of China Shippers’ Association. “They might lower freight rates when they are forming the alliance, but when they have taken market share and forced smaller players to get out of the market, they will raise the freight rates again.”
Not everyone in China is opposed to the P3 alliance. Zhang Shouguo, executive vice chairman and secretary general of the China Shipowners’ Association, said their attitude was neutral. “The shipping market should have different players, big and small. Competition is a must,” he said. “However, we also need to think of the needs of small and medium carriers, shippers, (less-than-containerload) shippers, as well as the ports. The industry needs to develop together and in a sustainable way.”
The Asian Shippers Council is also opposed to the alliance. “As the ball is now in the court of the regulators we urge them to think long and hard before giving their approval for P3, for it may well be a game changer we do not need,” it said in a statement.
P3 sources said the process of obtaining China’s approval has not been straightforward. There would be meetings with one official where it seemed they were making progress, but then a meeting weeks later with a different individual with whom they seemed to have to have to start all over again.
The lack of a response from Beijing has also meant that plans for the joint operating center, the vessel operations center that will be independent of the three carriers, can only progress so far.
