US and Chinese shippers united in opposition to Big Three P3 Alliance

CONCERNS that the proposed P3 Alliance between heavyweights Maersk, CMA CGM and MSC will reduce competition by controlling too much capacity on major trade lanes, have sparked calls from Chinese and US shipper groups for their respective regulators to block the plan.

The Asian Shippers Council (ASC), the China Shippers Association, the Hong Kong Shippers Council, the US Shippers Association (USSA), Med-America Shippers Association, Gemini Shippers Association and Fashion Accessories Shippers Association (FASA) all oppose the proposed P3 Alliance.

Some groups, including the Asian Shippers' Council and FASA, are pushing for an outright ban, while others, such as the USSA, have not directly requested that regulators reject the alliance but have expressed their concerns, reports the Journal of Commerce.

But many support the plan, as demonstrated by the first round of public comments to the US Federal Maritime Commission (FMC). The alliance would represent about 42 per cent of Asia-Europe capacity, 24 per cent of transpacific capacity and 40 to 42 per cent on the transatlantic, according to the FMC.

"Shippers can never be sure whether they have talked about rates or not. Shippers are suspicious whether these shipping lines are just service sharing, or consolidating all the operations," the Hong Kong Shippers Council said. "If they have such a big market share, they will easily come up with very unfavourable freight charges; they may even demand double freight rates during the peak seasons."

The P3 carriers say the plan will be strictly operational and they will still compete on price.

"They are not only controlling the price, but also the trade. In the future, it will be the cartel condition," said Sri Lanka Shipper's Council member Sean Van Dort at the annual meeting of the Asian Shippers' Council in Shenzhen.

ASC chairman John Lu, said the plan would be "something similar to a monopoly," a fear also raised by USSA in its public comment to the FMC. 

"A situation where other carriers are driven out of business could then result in the latter increase in transportation cost," FASA president Sara Mayes said in a letter to the FMC. 

The USAA, FASA and MASA are also concerned that the P3 network will reduce service quality. The fear is that greater use of transshipment hubs will result in longer transits. 

USAA also raised concerns about whether the P3 shipping lines will expand their vessel-sharing agreements to include feeder services from hubs, and questioned how US inland rail service agreements would be affected.

"Will MSC and CMA (CGM) soon have access to Maersk's flagship BNSF [railway] rail service to Los Angeles?" said US chemical shipper group head Beverly Altimore. "Will P3's involvement with the duopoly of the BNSF and [Union Pacific] squeeze out any current leverage that other carriers have with the railroads, thus limiting options for the US shippers?"

She added that her association believes non-P3 carriers with slots on P3 carrier vessels would lose their ability to secure capacity on the ships, further reducing competition.