Worldwide shipping reference firm Alphaliner has placed the 2M duo of AP Moller-Maersk and the Mediterranean Shipping Company (MSC) as the top two shipping companies globally in terms of TEU capacity and market share.
Maersk topped the pile, handling 2.7 million TEU annually as well as claiming a 15% market share, with MSC coming in second with 2.4 million TEU and a 13.5% market share.
CMA CGM recorded the third highest position with an 8.6% market share; along with the aforementioned shipping giants, it was a member of the now defunct P3 alliance from which 2M evolved.
The figures signify the dominance 2M wields in the market with a combined 28.5% market share.
However, August Braakman, secretary-general of the European Maritime Law Organisation, stated in a Lloyd’s List article that 2M may fall foul of Chinese regulations just as P3 did, as “Chinese competition law is a tool for conducting the country’s industrial policy.”
He added: “This highlights the importance of considerations … relating to the realisation of a fair and undistorted competition that aims at the creation of a level playing field for all competitors.”
In another twist, Alphaliner speculated on the possibility of a union between CMA CGM and an Asian shipping line, with United Arab Shipping Co (UASC) and China Shipping Container Lines (CSCL) potential suitors for a partnership which could rival 2M.
2M deal applies through China's Transport ministry - not Commerce
China may still reject the planned 2M container-shipping co-operation between Maersk and MSC despite its reduced scale and ambitions compared with the blocked 3P alliance, according to an influential international maritime and competition lawyer.
In an article in Lloyd’s List, secretary-general of the European Maritime Law Organisation August Braakman said the scale of the 2M alliance was still substantial and China’s decision was likely to be based on national industrial policy issues and the protection of Cosco, rather than necessarily just concerns about its potential to limit competition and choice for customers.
Mr Braakman, whose paper last year on the implications of the P3 Network is thought to have influenced Chinese regulators in their decision to prohibit the alliance, said the main consideration for that decision was that the alliance was not compliant with ‘social public interest’ and did not ‘promote a healthy development of the socialist market economy’ in China. He also observed that in the decision-making process around P3, the task of achieving those two objectives of Chinese competition law was not only entrusted to MofCom; the Ministry of Transport had also played an important role.
“Seen from this perspective, it is clear that the application of Chinese competition law is a tool for conducting the country’s industrial policy,” he said. “When reaching a decision, this highlights the importance of considerations either indirectly or not at all relating to the realisation of a fair and undistorted competition that aims at the creation of a level playing field for all competitors.”
He said Maersk and MSC appeared quite confident that the regulatory authorities would give their approval to the 2M alliance. With regard to China, this optimism apparently stems from the fact that MofCom had been unhappy with the market share of the P3 alliance and issues over the independence of pricing and marketing of capacity.
He questioned whether the reduced size of 2M compared with P3 would be enough to satisfy regulators, and said the only important organisational difference between P3 and 2M was that 2M would not have any jointly owned independent entity with executional powers, and rather than setting up a network centre, 2M will only have a joint co-ordination committee to monitor its daily operations.
He observed that for P3, it had been agreed that each partner’s pricing and marketing was to remain independent, “similar to 2M”.
He continued: “The 2M partners take the view that the absence of a network centre implies that 2M is a purely operational vessel-sharing agreement and for that reason does not fall under the scope of China’s Anti-Monopoly Law. Therefore, the 2M alliance will not be filed with MofCom but only with the Ministry of Transport.
“Irrespective of the legal validity of this argument, the question is whether the different organisational structure of 2M will make a difference with regard to the assessment thereof by the Chinese authorities in light of its industrial policy.”
He said it should be borne in mind that the biggest Chinese shipping company, Cosco, apart from being party to 18 conference and discussion agreements, also participates in the CKYH alliance, “to which the 2M alliance will appear a severe competitor. Cosco, moreover, is facing a very precarious financial position,” Mr Braakman observed.
“EU rulings that would prohibit conference and discussion agreements in which Cosco participates and that would govern competition between the 2M and the CKYH alliances therefore might adversely affect the position of Cosco, and thereby the realisation of the goals of Chinese industrial policy. I have little doubt that these considerations, and more in particular the position of Cosco, have played a role in the rejection of P3 and will play a role in the assessment of 2M,” he said.
“In view of the above, I feel that a consistent attitude on the part of MofCom and the Ministry of Transport may induce them to conclude that the 2M alliance is not compliant with ‘social public interest’ either, and does not ‘promote a healthy development of the socialist market economy’ in China.
“In other words, this attitude may induce them to conclude that also 2M is contrary to Chinese industrial policy. This viewpoint would likewise virtually kill the 2M alliance.”
China may still reject the planned 2M container-shipping co-operation between Maersk and MSC despite its reduced scale and ambitions compared with the blocked 3P alliance, according to an influential international maritime and competition lawyer.
In an article in Lloyd’s List, secretary-general of the European Maritime Law Organisation August Braakman said the scale of the 2M alliance was still substantial and China’s decision was likely to be based on national industrial policy issues and the protection of Cosco, rather than necessarily just concerns about its potential to limit competition and choice for customers.
Mr Braakman, whose paper last year on the implications of the P3 Network is thought to have influenced Chinese regulators in their decision to prohibit the alliance, said the main consideration for that decision was that the alliance was not compliant with ‘social public interest’ and did not ‘promote a healthy development of the socialist market economy’ in China. He also observed that in the decision-making process around P3, the task of achieving those two objectives of Chinese competition law was not only entrusted to MofCom; the Ministry of Transport had also played an important role.
“Seen from this perspective, it is clear that the application of Chinese competition law is a tool for conducting the country’s industrial policy,” he said. “When reaching a decision, this highlights the importance of considerations either indirectly or not at all relating to the realisation of a fair and undistorted competition that aims at the creation of a level playing field for all competitors.”
He said Maersk and MSC appeared quite confident that the regulatory authorities would give their approval to the 2M alliance. With regard to China, this optimism apparently stems from the fact that MofCom had been unhappy with the market share of the P3 alliance and issues over the independence of pricing and marketing of capacity.
He questioned whether the reduced size of 2M compared with P3 would be enough to satisfy regulators, and said the only important organisational difference between P3 and 2M was that 2M would not have any jointly owned independent entity with executional powers, and rather than setting up a network centre, 2M will only have a joint co-ordination committee to monitor its daily operations.
He observed that for P3, it had been agreed that each partner’s pricing and marketing was to remain independent, “similar to 2M”.
He continued: “The 2M partners take the view that the absence of a network centre implies that 2M is a purely operational vessel-sharing agreement and for that reason does not fall under the scope of China’s Anti-Monopoly Law. Therefore, the 2M alliance will not be filed with MofCom but only with the Ministry of Transport.
“Irrespective of the legal validity of this argument, the question is whether the different organisational structure of 2M will make a difference with regard to the assessment thereof by the Chinese authorities in light of its industrial policy.”
He said it should be borne in mind that the biggest Chinese shipping company, Cosco, apart from being party to 18 conference and discussion agreements, also participates in the CKYH alliance, “to which the 2M alliance will appear a severe competitor. Cosco, moreover, is facing a very precarious financial position,” Mr Braakman observed.
“EU rulings that would prohibit conference and discussion agreements in which Cosco participates and that would govern competition between the 2M and the CKYH alliances therefore might adversely affect the position of Cosco, and thereby the realisation of the goals of Chinese industrial policy. I have little doubt that these considerations, and more in particular the position of Cosco, have played a role in the rejection of P3 and will play a role in the assessment of 2M,” he said.
“In view of the above, I feel that a consistent attitude on the part of MofCom and the Ministry of Transport may induce them to conclude that the 2M alliance is not compliant with ‘social public interest’ either, and does not ‘promote a healthy development of the socialist market economy’ in China.
“In other words, this attitude may induce them to conclude that also 2M is contrary to Chinese industrial policy. This viewpoint would likewise virtually kill the 2M alliance.”
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