WASHINGTON — The majority of public comments sent to the Federal Maritime Commission regarding the proposed P3 Network were supportive of the vessel-sharing alliance among the world’s three largest globalcontainer lines.
The unprecedented vessel-sharing agreement involving Maersk Line, Mediterranean Shipping Co. and CMA CMA, if approved by the FMC and regulatory authorities in Europe and China, will expand port coverage, stabilize service, provide reliable and competitive transit times, increase slot availability and help stabilize the industry as a whole, most of the 50-plus respondents said in comments released today.
“The first benefit is the service improvement. From a (non-vessel-operating common carrier) point of view, this means that we will have a new advanced shipping product to sell to our U.S. consignees that are in need of more reliable and stable services to satisfy their final customers,” said Jonathan Crestot, sea freight manager at Logistics International Service. “We also believe that the P3 will be beneficial to our company and our clients because of the vessel capacity increase and additional direct calls.”
The strong showing of support for the P3 appears to have been boosted by a form letter. Despite the uniformity of many of the public comments, the responses highlight some anxiety over the P3 and provide FMC commissioners with questions to pose to the carriers.
Although the P3 wouldn’t allow the carrier to set rates together, the Med-American Shippers Association noted that the success of these protections could be limited by the P3 carriers’ high market share in major trade lanes. The alliance would represent approximately 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.
“Since the three carriers will be meshing their services operationally and providing space on the same vessels, they will ultimately all be selling the same service, which will be hard to differentiate simply be marketing different brands,” MASA President Angelo Nino Caponi wrote. “Thus, as their operations converge more and more, it is likely that they will be capable of influencing the competition in the market.”
Caponi also noted that the P3 carriers’ deployment of large vessels will increase usage of hub ports, extending transit times for the wine shipments of its member shippers and “expose the containers to temperature variations, seasonally extreme, with negative effects for the shelf life of the wines transported.”
Atlantic Container Line President and CEO Andrew Abbott said the alliance would "greatly distort the market," making it "impossible for non-consortium carriers to compete with them." The creation of such a large consortium would spell the end of smaller port, terminals, stevedores, trucking companies and "logistics suppliers of every type."
"If P3 is approved by the FMC, then you will force every remaining carrier to join forces in a similar bloc to be competitive," said Abbott. "The single, independent carrier will go out of business. American exporters will no longer have a large portfolio of carriers to choose from."
Others, such as Bruce Carlton, president and CEO of the National Industrial Transportation League, gave the FMC plenty of questions to pose to carriers about the plan. Carlton questioned what impact the P3 carriers’ membership in the Transpacific Stabilization Agreement would have on the alliance, and what protections would be imposed so carriers can’t influence each other’s pricing decisions.
Many comments urged the FMC to scrutinize the P3 carefully, considering a VSA of this magnitude has never been proposed. The FMC today said it plans to ask P3 carriers more questions on the plan, stopping the clock on its review.
Without such a pause, the FMC would have until mid-December — prior to its planned summit with Europe and China on Dec. 17 — to decide whether to allow the P3 to go through or ask a federal judge to block it. The summit will address global regulatory issues relating to carrier alliances, VSAs and the impact of operation agreements on international trade, the FMC said.
Speculation has raged since the three carriers announced plans for the VSA in June over the impact the P3 would have on capacity, rates and services in the world’s three largest trade lanes: the trans-Pacific, Asia-Europe and trans-Atlantic. Some of those answers came when MSC released comprehensive details of the plan in October.
Other speculation has centered around how other carriers would respond, either by forming new partnerships, expanding others or outright consolidation. The first dominoes began to fall earlier this week, when the G6 alliance of APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL on Tuesday announced plans to expand into the trans-Atlantic and Asia-U.S. West Coast trade lanes to compete with the P3.
A day later, Germany’s Hapag-Lloyd said it was in talks with Chilean carrier CSAV about a possible merger that would create the world’s fourth-largest ocean carrier by fleet capacity.
The news came just months after Hapag-Lloyd and Hamburg Sud, another German carrier, broke off merger talks because the two sides couldn’t agree on terms of ownership.
Maersk to make more from P3 than partners on ship size: Macquarie
MAERSK Line could save up to US$1 billion in operating costs on the Asia-Europe trade lane if the competition authorities approve the P3 Network, according to Macquarie Research.
The Australian financial house said the gain accruing to the Danish shipping giant will be derived from the fact that it will have the largest ships vis-a-vis and thus benefit more from the economies of scale than the other partners, Mediterranean Shipping Co and CMA CGM.
Vessels larger than 10,000 TEU are most likely to be used on the Asia-Europe and Asia-Mediterranean trade lane. The average size of Maersk's Asia-Europe fleet would increase from 9,600 TEU at present to 14,100 TEU by the end of 2015. That would reduce Maersk Line's unit costs on the trade lane by as much as 34 per cent, Macquarie said.
"[Our] analysis suggests the average vessel size available to the P3 partners on these trade lanes would increase significantly compared with the status quo - most notably on Asia-north Europe and Asia-[Mediterranean], where we estimate average vessel capacity will increase by 2,500 TEU and 3,100 TEU, respectively," said Macquarie.
This, Macquarie said, "suggests that Maersk Line will see a greater reduction in unit costs from the P3 Network than both of its partners". This could provide an overall cost saving of at least $1 billion, equating to a return on invested capital increase of around five percentage points, Macquarie said.
The Australian financial house said the gain accruing to the Danish shipping giant will be derived from the fact that it will have the largest ships vis-a-vis and thus benefit more from the economies of scale than the other partners, Mediterranean Shipping Co and CMA CGM.
Vessels larger than 10,000 TEU are most likely to be used on the Asia-Europe and Asia-Mediterranean trade lane. The average size of Maersk's Asia-Europe fleet would increase from 9,600 TEU at present to 14,100 TEU by the end of 2015. That would reduce Maersk Line's unit costs on the trade lane by as much as 34 per cent, Macquarie said.
"[Our] analysis suggests the average vessel size available to the P3 partners on these trade lanes would increase significantly compared with the status quo - most notably on Asia-north Europe and Asia-[Mediterranean], where we estimate average vessel capacity will increase by 2,500 TEU and 3,100 TEU, respectively," said Macquarie.
This, Macquarie said, "suggests that Maersk Line will see a greater reduction in unit costs from the P3 Network than both of its partners". This could provide an overall cost saving of at least $1 billion, equating to a return on invested capital increase of around five percentage points, Macquarie said.
The US Federal Maritime Commission (FMC) has requested more information and documents of the proposed P3 alliance.
FMC commissioners voted to approve a request for more information on the planned alliance of Maersk Line, Mediterranean Shipping Co (MSC) and CMA CGM).
“This request for additional information delays the effectiveness of the proposed agreement. After the parties have submitted the requested information and documents, a new 45-day regulatory review period will begin,” the FMC said. An additional 15-day public comment period will also be announced once the request for additional information is published in the FMC register next week.
Commenting on the move FMC commissioner William Doyle said: “In addition to my own questions and considerations posed by my fellow Commissioners, I have taken into account comments submitted to the Commission and drafted further questions addressing those filings by stakeholders, including but not limited to the concerns publicly raised by the National Industrial Transportation League, the International Longshoremen’s Association, and the Global Shipper’s Forum.”
"I appreciate the comments submitted to the FMC, including those by consumers, small businesses and ports; it is helpful in meeting our mission as we give due examination to the proposed agreement," he added
The planned P3 alliance came under particular scrutiny from the FMC after announced plans for its global service network prior to make full regulatory filings with the FMC.
In response the FMC called an international regulatory summit with Chinese and European regulators, which is to be held on 17 December.
Comments
Post a Comment