The P3 Network carriers - Maersk, Mediterranean Shipping Co. and CMA CGM - have started sharing details of their proposed vessel-sharing agreement with U.S., European and Chinese regulatory authorities.
The three carriers are Nos. 1, 2 and 3, respectively, in terms of size among the world’s liner carrier fleets. They don’t make decisions lightly and have a long tradition of combativeness amongst themselves in terms of winning over big shippers and securing market share. Thus to work together within an alliance is a big deal in myriad ways.
Here are several things we know about the P3’s goals and objectives, so far:
- According to their Oct. 28 filing with the U.S. Federal Maritime Commission, the agreement would give the three carriers the ability to discuss and agree on the size, number and operational characteristics of vessels to be operated on transatlantic and transpacific trade lanes. The P3 network vessel-sharing agreement also includes the Asia-Europe trade, which is not subject to the Shipping Act or FMC jurisdiction and is not reflected in the agreement.
- Initially, the carriers said they would operate about 130 vessels in the transpacific and transatlantic trades, with nominal capacities ranging from 4,000 TEUs to 12,250 TEUs. Without further amendment to the agreement, they said they would be authorized to operate up to 180 vessels in the trade, each with a capacity of up to 19,200 TEUs.
- The carriers would contribute vessel capacity as they agree among themselves and create a network center in London that would have authority to skip sailings when utilization is likely to be low at times around Christmas, Easter, the Chinese New Year, and Chinese May and October bank holidays. Likewise, the network center may propose extra loaders be added at times of high demand.
- The agreement says each of the three carriers shall have a slot capacity allocation on each service and in each trade lane covered by the agreement, “which is the maximum number of slots and weight (whichever is reached first) specified in its capacity allocation as agreed by the parties.”
- Each carrier may propose changes to its allocation on any service by way of an exchange of slots, provided this would not result in a revision to the parties’ capacity allocation by trade lane (Far East-North America West Coast; Far East-North America East Coast; Far East-U.S. Gulf; Northern Europe-U.S. East Coast; Mediterranean-U.S. East Coast). Such proposals would be made via the network center, which would notify the P3 Management Committee. “Such proposals may be made and shall be discussed at such intervals as the parties may agree from time to time,” the carriers said.
Early estimates by Maersk Line’s chief trading and marketing officer put the P3’s market control at about 42 percent on the Asia-to-Europe route, 24 percent in the transpacific, and 40-42 percent in the transatlantic. BlueWater Reporting, meanwhile, estimates the P3’s allocated capacity at the end of October stood at 43.9 percent between Asia and Northern Europe, 18.3 percent between Asia and North America, and 27.6 percent between Northern Europe and North America. Allocated capacity differs slightly from nominal capacity — it is BlueWater Reporting’s estimate of what capacity is actually made available to shippers on specific lanes.
Most of the top 20 carriers today are in alliances, but the P3 is unique because it involves the three largest container shipping companies, which bring to the table a collective 240 vessels with 2.6 million TEUs of capacity.
While regulators vow to scrutinize the market implications of the P3, Maersk, MSC and CMA CGM have surely done their homework and are ready to vigorously defend their position. If shippers or other carriers have concerns about the P3 then they and their trade associations need to express their concerns or demands for mediation to the FMC and other regulatory authorities. They must be willing to fight in solidarity, or step aside and allow the P3 to sail through.