mercedesduchDespite the fact the various players in the shipping world having already spent time examining the consequences of the P3 Network, it’s still not possible to see the full effects of a scheme of such dimensions: three of the world’s biggest shipping lines MAERSK LINE, MEDITERRANEAN SHIPPING COMPANY and CMA-CGM have agreed to pool no less than 255 vessels, with a capacity of 2.6 million containers, on 27 routes covering Asia to Europe, trans-Pacific and transatlantic with the aim of widening their services and optimising their operations.

The message we’ve been hearing is that the P3 Network is based on principles that respect the sector, fair competition and the regulatory environment.

The alliance was born out of a desire to “optimise operations and service offerings” and will offer “more ports of call, more weekly sailings, and will reduce the number of disruptions caused by cancelled sailings”. Of course, any collusion on pricing is expressly ruled out.

To avoid the spectre of the old “liner conferences”, denounced by Brussels, the three shipping lines have made it clear that the network will be run independently and that each company will continue to have its own sales, marketing and customer service functions.

The P3 Network has announced that it will set up a joint vessel-operating centre called JVOC, based in London with a branch in Singapore.

On the basis of the information available, the operation of the alliance, the P3 Network, appears to meet competition law requirements.

The shipping companies involved deny that this is anything like a monopoly, given that the European Union adopted, in 2010, a rule exempting consortia for a five year period, which fixed the market share limit at 30% for members of a conference and 35% for those operating outside a conference. These quotas are being carefully scrutinised in Brussels, given that the Network is going to be closely watched not only by the EU, but also by the authorities in the US and China.

For shipping lines, their core business is transport, but this alliance will also have a serious impact on related businesses such as ship operating and container handling.

From a shipper’s perspective, we note that the AsianShippers Meeting and the EuropeanShippers Council have expressed their concern. “This cooperation should in no way influence the free choice of shippers and fair competition based on price, service level and routing” was the clear reaction by EuropeanShippers, during their annual meeting in Brussels, to the news of the strategic deal between the three biggest shipping lines in the world, who will control 37.3% of the world market under this agreement.

In terms of ports, the maritime sector has identified Rotterdam and Port Klang as possibly significant losers, while Amberes and Wilhelmshaven are likely beneficiaries of the P3 Network.

In Spain, apart from the eventual reduction in the number of weekly calls possibly foreseen at some ports, the size of the container ships requires ports to be of a certain size and with certain facilities, something that does not apply to all of Spain’s ports.

According to information provided by MSC, the port of Algeciras will be involved on at least four services offered by the P3 Network. According to Algeciras Port Authority President, Manuel Morón, “the battle of the containers has only just begun. The final situation is not yet decided”. Valencia finds itself in the worst position, with the P3 network confirming to president Rafael Aznar that “there won’t be any more calls on the Asia-North Europe route”.

The president of State Ports Authority, at the closing of PROMart 2013, suggested that it is still important to listen to the competent authorities before the P3 Network comes into service.

Other shipping lines also didn’t take long to react: the members of the G6 -Hapag-Lloyd, NYK, OOCL, Hyundai Merchant Marine, APL and MOL- plan to increase their transatlantic and Asia-US routes to challenge the P3 – Maersk, MSC y CMA CGM-, with the aim of growth from a network of 240 ships connecting 66 ports on 29 loops, compared to the 252 vessels, 90 ports and 28 loops offered by P3.

Although it looks like the P3 network will enter into service in April 2014, the shipping lines involved hasten to make it clear that the operation is still being developed and before it becomes a reality it will need to be approved by the competent authorities in Europe, China and the US.

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