Competitors of the budding P3 alliance will heave a sigh of relief that only moderate capacity growth is planned in its forthcoming schedules between Asia/Europe and Asia/North America, but its new services are a stark reminder of the awesome size of Maersk/MSC/CMA CGM’s combined resources.
Maersk, MSC and CMA CGM have opted for only moderate vessel capacity growth in their new schedules that take effect during 2Q 14, inferring that service quality rather than quantity will be the P3 alliance’s main fighting tool. In the case of Asia/Northern Europe, just a 2.25% increase is planned compared to the capacity offered at the beginning of September (transhipment and slot charter cargo excluding). There will also be one less weekly service, although this will be more than compensated by a 14% increase in average vessel capacity, up to 13,032 teu, as shown in Table 1, including the deployment of more 18,000 teu vessels from Maersk.
Table 1
Comparison of Current and Future Maersk, MSC and CMA CGM’S Asia/North Europe Services
Source: Drewry Maritime Intelligence, derived from P3 and own research
There will also be one less weekly service between Asia and the Mediterranean, but it is not yet possible to assess the impact of this on capacity as vessel deployment within the new services remains to be clarified (see Table 2). However, here again, the reduction will probably be more than compensated by the cascading of 10 larger ULCVs no longer required between Asia and Northern Europe. It has only been confirmed so far that the P3’s new services will deploy vessels between 8,500 teu and 16,000 teu, but as the 64 vessels currently deployed there already average 10,467 teu, that does not mean much.
Table 2
Comparison of Current and Future Asia/Mediterranean Services Provided by Maersk, MSC, and CMA CGM
Source: Drewry Maritime Research, derived from P3 and own research
The position within the transpacific is more complicated to assess as several end-to-end services are being replaced by innovative new pendulum schedules that sometimes flit between the North American East and West coasts in order to gain economies of scale. There is also one ‘butterfly’ schedule deploying a fleet of 13 x 9,500 teu ships that crosses the pacific ocean twice in two separate services called Jaguar/TP2 and New Orient/TP8.
Tables 3 and 4 show how the existing Transpacific schedules are planned to be changed in more detail, from which it can be seen that Asia/WCNA capacity will be increased by approximately 5%, up to 2,756,000 teu, and Asia/ECNA capacity will be increased by around 8%, up to 1,586,000 teu, compared to that available at the beginning of September. As before, there will be three Suez Canal schedules and one Panama Canal service between Asia and ECNA, only the vessels will be slightly bigger.
Here again, this does not take into account transhipment and slot charter cargo, so the increases are only approximations.
Table 3
Comparison of Current and Future Asia/WCNA Services Provided by Maersk, MSC and CMA CGM
Source: Drewry Maritime Research, derived from P3 and own research
Table 4
Comparison of Current and Future Maersk, MSC and CMA CGM Asia/ECNA Services
Source: Drewry Maritime Research, derived from P3 and own research
The effects of the changes being made to Transatlantic services will only be analysed by CIW at a later date due to the complexity of separating existing services shared with other lines. The vessels to be deployed in each new loop afterwards also have yet to be confirmed.
Be that as it may, by the time everything is in place in the new Asia/Europe, Transpacific and Transatlantic schedules, a total of 252 vessels offering a combined capacity of 2.6 million teu will be deployed in 28 separate weekly loops, of which Maersk will provide 42%. A key feature of this network, which will entail ‘no significant change in vessel speed’ is that it will be run by an independent vessel operating centre, unlike other alliances where loops tend to be operated separately by each member line.
All of the new east-west schedules remain subject to regulatory approval from trading partners, particularly Europe, the US and China. As the P3’s market share between Asia and Europe will exceed the 30% maximum allowed by the EU’s Consortia regulations, nothing can be taken for granted.
In a nutshell, it will need to be determined if the advantages offered by the P3 alliance outweigh its disadvantages, including the fear of anti-trust behaviour (i.e. abuse of a dominant position). On the plus side, Maersk has made it clear that it will be continuing with Daily Maersk from Asia to Northern Europe. And, as MSC and CMA CGM will be sharing the same vessels, they will, presumably, be looking to offer something similar, assuming that Maersk’s rigid cargo booking and container terminal delivery procedures can be replicated. Maersk’s electronic services are also said to be a hard act to follow.
It could even be that the geographic scope of Daily Maersk will be expanded, given the much wider choice of services available to the three carriers, although Maersk says it currently has no plans in that direction. For example, Maersk will now have access to six weekly transpacific services between Asia and WCNA instead of four.
If the centralised co-ordinating office set up by the three carriers functions according to plan, MSC’s and CMA CGM’s schedule reliability should also improve significantly.
On the other hand, some shippers are already arguing that the P3 alliance is a danger to free and fair competition, so needs to be examined closely by regulatory authorities before anything is approved. Not surprisingly, therefore, the US’ Federal Maritime Commission has just called for a summit meeting of Global Regulatory Authorities to assess this situation, although no date or agenda has yet been agreed. The European Commission will struggle with this proposal, presumably, as, in theory, it no longer has the right to sanction the P3 alliance ahead of implementation; it can only react to customer complaints afterwards under the recently introduced ‘self-regulation’ system. Prior to that, it is up to service providers to determine if they are operating within the law, although they may try to obtain a ‘letter of comfort’ beforehand.
Our View
Drewry is still of the view that the advantages of the P3 alliance should outweigh its disadvantages, including better pricing stability, schedule reliability, frequency, and direct port pair connections. The danger is that with less to differentiate service quality between the three carriers, price will become the determining factor.
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