What is The Current Status of The P3 Container Shipping Alliance?

With the shipping rate volatility, overcapacity and ships on lay-up, there has been quite a bit of anxiety and excitement over the P3 Shipping Alliance. Last year, when the three leading container shipping carriers announced they would launch the alliance in July of 2014, nearly everyone in the industry got nervous, especially those who supported it; such as port regulators, terminal operators, import and export companies and freight forwarders.  Competitive shipping companies worried about antitrust concerns, as well as the actual demand for shipping containers in general.  Unaligned carriers predominately worried about price-fixing as they reflected on their own survival.

For the uninitiated, the three largest carriers in the world, Maersk Line, Compagnie  Maritime D’afretement (CMA-CGM), and Mediterranean Shipping Company make up the new alliance, which will command roughly 42 percent of shipping to/from Europe, and about 15 percent of global shipping to the tune of 2.6 million TEU (20 foot equivalent unit).  Under the on the terms of their operating agreement, these three European companies will have the ability to use each other’s ships to move cargo.  Albeit an "alliance", the P3 will operate all on its own, and sales and marketing will remain under each independent shipping line.  Combining loads for maximum capacity on one ship rather than have more than one heading in the same direction is meant to streamline costs and improve efficiency, but smaller, less powerful carriers worry about trade infringements, undo competition and rate control by the new giant entity.

Historically, the global container shipping has been an industry that has expressed little concern about alliances between carriers. The G-6 alliance that formed in 2011 for example, received barely cursory review by the Federal Maritime Commission and world regulators.  However, this time around it can be expected that the P3 shipping alliance will more than likely to meet regulatory resistance, as Europe and China regulators are looking to dig deeper into existing alliances.  The G-6 group (Hapag-Lloyd, NYK Lines, Orient Overseas Container Line. Hyundai Merchant Marine, APL and Mitsui O.S.K. Lines) is already underway toward upping its capacity and ports served.  They anticipate the route and load improvements will play against the launch of P3, as they expect matters to coincide with it.

Image credit: The P3 Alliance by TEU.