The decision by China to reject the P3 Network that Maersk, MSC and CMA-CGM planned to set up on the major east-west shipping lanes appears to have resulted from concerns about market concentration in the Asia-Europe trade, not on routes to and from the U.S., Federal Maritime Commissioner William P. Doyle noted today.
"Based on all available information, the Ministry of Commerce of the
People’s Republic of China held fast to a 30-percent market share
threshold for controlling a trade route. In its review, China’s
Ministry of Commerce found that the P3 Network would control up to 47
percent of the container business on the Asia-Europe service route.
Thus, China rejected the container-shipping alliance proposal based on
their competition concerns in the Asia-Europe shipping market."
He noted the FMC had the responsibility to review the P3 parties’ submission for their vessel-sharing alliance on the transpacific and transatlantic trade routes and "did not have jurisdiction over the Asia-Europe service route; therefore, the FMC did not issue a decision with respect to that route.
"Based on the commission’s review, the proposed P3 Network would have average trade shares of 23 percent in the Asia/North America trade and 23 percent in the Europe/North America trade. The commission sought and received from the P3 parties amended language that would protect small businesses, marine terminal operators, bunker operators, tugs, and other small businesses and third parties. Thus, the P3 parties would be required to negotiate independently and enter into separate contracts with the third parties. In addition, the P3 agreement activities would be subject to a special monitoring program intended to provide an early warning system to detect capacity issues and market problems."
The FMC said in a statement that in March it "concluded extensive review of the transpacific and transatlantic effects of the P3 Agreement and determined that the
agreement was not likely at that time, by a reduction in competition, to
produce an unreasonable increase in transportation cost or an
unreasonable reduction in transportation service under section 6(g) of
the Shipping Act. P3 Agreement parties would have been subject to
specifically tailored monitoring reports to ensure compliance with the
Shipping Act once the agreement became operational. The commission’s
decision remains in effect absent a withdrawal of the agreement by the
FMC Chairman Mario Cordero stated at the time, "Ocean carrier vessel-space alliances offer the
potential benefit of cost savings and environmental efficiencies that
come from coordinated deployment of newer, larger vessels. The FMC, in
evaluating such agreements, will continue to balance those benefits with
the potential harm from a concentration of decision-making power in
terms of port coverage, sailing schedules, and necessary trade lane