China blocks European P3 pact, sending Maersk down
The Chinese Ministry of Commerce said late yesterday that the proposed P3 vessel-pooling accord, which also included Mediterranean Shipping Co. and CMA CGM SA, would “restrict competition” on the busiest Asia-Europe container routes.
Maersk and its two allies agreed last June to establish an operational pact with the aim of reducing costs on Asia-Europe, trans-Atlantic and trans-Pacific routes. Container lines have been battling industry overcapacity after a boom in ship orders collided with the global financial crisis, triggering the worst slump in prices for the carriage of cargo since containerization became global in the 1970s.
The company accepts China’s verdict and with no alternative plan in hand it will now “give up on P3,” Andersen said. CMA CGM, based in Marseille, France, and MSC, which has its headquarters in Geneva, are both closely held.
The companies had planned to commit 255 vessels deployed on 29 trade loops to a joint centre that would have run a combined fleet independently. Maersk was slated to contribute 42 percent of the total, including its Triple-E class, the largest-ever container ships with a capacity of 18,000 boxes.
China’s rejection of P3 comes after the U.S. Federal Maritime Commission approved the alliance in March and the European Commission closed an EU antitrust probe this month.
Shipments abroad advanced 7 percent in May from a year earlier, with imports down 1.6 percent, a government report showed. China recorded a $35.9 billion surplus for the month.
Maersk CEO Andersen said the partners had worked hard to address the concerns of all regulators involved, adding that Chinese shipping lines don’t yet have the global route profile needed to have played a useful role in the planned alliance.
“We thought it was a good proposition and would allow us to get cost out and reduce fuel consumption,” he said by phone. “There was no impact on the market side. We never saw this as consolidation and neither did the U.S. and Europe.”
Maersk has a 14.9 percent share of the global market, based on the number of containers available in its own fleet and as chartered capacity, according to Alphaliner, which provides a daily update. MSC has 13.4 percent and CMA CGM 8.6 percent.
The P3 pact had initially aimed to commence operations during the current quarter, before Maersk said May 21 that the start date had slipped to autumn amid regulatory scrutiny.
Source: bloomberg.com
