Most discussion around the proposed P3 Network between Maersk Line, Mediterranean Shipping Co. (MSC) and CMA CGM centers around potential implications of the world's three biggest liner carriers joining forces operationally on the three biggest east-west trades.
The concerns tend to focus on how the three carriers’ joint network will look on the Asia-Europe, transpacific, and transatlantic trades; how their collaboration will affect the competitive balance of those trades; and how other alliances and individual lines will react.
But the reality is that there have already been some tangible consequences of the mooted alliance. For one, analysts such as SeaIntel and Drewry have noted that MSC’s schedule reliability has improved markedly over the past year, perhaps a sign that it recognized it needed to perform closer to market leader Maersk on that front if the lines’ operational networks were to be effectively joined. CMA CGM’s schedule reliability tends to fall at about the industry average on a global basis, but MSC’s tended to languish toward the bottom of any rankings until the last year or two.
At the TPM Asia conference in Shenzhen last week, SeaIntel Chief Operating Officer Alan Murphy explained a chart showing that the three P3 members are now the top performing lines in terms of schedule reliability on the Asia-Mediterranean trade.
“If you’re not a P3 carrier, this should scare the bejeezus out of you,” Murphy said. “This is not a fluke. MSC has been endeavoring to reach the performance of the other carriers.”
Indeed, a couple of other speakers at the Journal of Commerce
-organized event spoke about the impact on shippers’ rates and services levels if the P3 is approved by regulators.
Alphaliner Executive Consultant Tan Hua Joo told the audience at the conference to imagine securing Maersk’s service levels at MSC prices. But Simon Heaney, of Drewry Shipping Consultants, had an alternative view. He said that the merger could bring MSC’s service levels up to the mark of Maersk.
There is also evidence, beyond improved schedule reliability, that MSC has been gradually changing its identity. A Hong Kong-based manager at a major non-vessel-operating common carrier (NVO) said to American Shipper
at the conference that MSC has been going more to direct contracts with shippers in lieu of using NVOs and forwarders to book cargo.
Information provided to American Shipper
by the trade intelligence firm Zepol Corp. about U.S. inbound container volumes bears that out, at least on U.S. import trades.
From January through September of this year, MSC used NVOs for 4.8 million TEUs of U.S. inbound volume, compared to nearly 6 million TEUs in the same period in 2012. The trend stretches back to 2011. In that year, MSC’s volume booked through NVOs was 7.9 million TEUs. In 2012, it dropped to 7.5 million TEUs. It will likely be significantly less this year.
Viewed through another lens, that of percentage of total volume booked through NVOs, MSC’s dependence on third parties for cargo booking has dropped markedly. In August 2011, 36.3 percent of its U.S. inbound cargo was booked through NVOs. In August 2012, that dropped to 30.3 percent. In August 2013, it fell to 25.6 percent.
The numbers are similar across other months.
The impact in Asia-Europe is not as clear, but MSC’s reliance on forwarders is much higher in that trade, so a similar change in strategy could have significant impacts.
The NVO representative who spoke to American Shipper
suggested “K” Line and APL were stepping into the breach as far as the usage of NVOs, and again, Zepol data backs that up. “K” Line has seen its ratio of NVO-booked cargo on U.S. inbound trades rise from 39.1 percent in September 2011 to 52.4 percent in September 2012; the ratio rose to 54.5 percent in September 2013.
APL, which is traditionally very reliant on direct relationships with beneficial cargo owners, has seen its ratio go from 13 percent in August 2012 to 19.3 percent in August 2013; it rose from 12.7 percent in September 2012 to 18.3 percent in September 2013.
Murphy said the thing that stands out most to him about the potential of the P3 is the options the three lines will have to structure their network.
“The size and ability to tailor the network to meet different needs is one of the major advantages of the P3 network,” he said.
He said P3 lines currently offer 421 direct port calls on the Asia-Europe trade, before drawing out a few scenarios that explain the flexibility availability to the carriers. On one extreme, the lines could structure their joint network to call only at four main hubs only on the Asia-Europe route, serving all other ports entirely by feeder. This would be the hub-and-spoke model (employed to a certain extent by each carrier already) on steroids.
At the other extreme, the lines could offer direct port calls at 672 ports, a scenario Murphy called the “ultimate milk run” and the opposite of the conveyor-belt type scenario above. The reality is that their network will be somewhere in the middle, but Murphy’s point was that the P3 lines’ options severely outnumber those of its competitors, particularly on the Asia-Europe trade. And that’s not even getting into their ship size advantage.
“The big difference is between their (current) operational performances,” he said.
But according to data on the schedule reliability front, and according to MSC’s declining use of forwarders as a means to secure cargo, that gap is narrowing.
and CMA CGM
have all posted information about the new P3 Network on their websites.
The three liner carriers said they plan to operate services on the major east-west trade routes jointly, but continue to market them separately. They are giving the various strings different names, and in the list below, the names used by Maersk/MSC/CMA CGM are given in that order. If the service is not mentioned in a document by one of the carriers, a question mark appears.
Here are some details as provided by the three companies. The size ships to be used in some of the services comes from the MSC presentation.
Between Asia and the U.S. West Coast, the carriers are planning five weekly services, which will employ ships ranging in size from 11,500 TEU to 4,500 TEU.
- TP6/Pearl/PRX1. This string will use 16 ships, each with 11,500-TEU capacity. The ships are also used in an Asia-Europe service. The rotation is (Europe)-Singapore-Vung Tau-Nansha-Hong Kong-Yantian-Los Angeles/Long Beach-Shanghai-Ningbo-Yantian-Chiwan-Tanjung Pelepas-(Europe).
- TP1/Eagle/PRX2. This string will use 15 ships, each with 9,500-TEU capacity. The ships are also used in an Asia-Europe string. The rotation is (Europe)-Tanjung Pelepas-Chiwan-Yantian-Xiamen-Los Angeles/Long Beach-Oakland-Busan-Ningbo-Shanghai-Hong Kong-Chiwan-Yantian-Singapore-(Europe).
- TP2-TP8/Jaguar-New Orient/Yangze-Bohai. These are two weekly services with a “butterfly” rotation that share 13 ships, each with 9,500-TEU capacity. The two strings have a different itinerary, and the ships will switch between the two itineraries every sailing. The first rotation is Kaosiung-Hong Kong-Xiamen-Fuzhou-Shanghai-Ningbo-Los Angeles/Long Beach. The ships then return to Asia for the second rotation of Dalian-Xingang-Qingdao-Shanghai-Los Angeles/Long Beach-Oakland. The ships then return to Kaohsiung and pick-up with the first rotation.
- TP5/Sunrise/Sunrise. This string will have 6 ships, each with 4,500-TEU capacity. The rotation is Kobe-Busan-Qingdao-Kwangyang-Busan-Hakata-Nagoya-Yokohama-Los Angeles/Long Beach-Oakland-Dutch Harbor-Yokohama-Kobe.
- TP9/?/Columbus PNW. This string uses 16 ships, each with 8,500-TEU capacity. While not included in the MSC presentation, Maersk and CMA CGM list the TP9 as one of the P3 services. The rotation is Tanjung Pelepas-Hong Kong-Yantian-Shanghai-Busan-Seattle-Vancouver, B.C.-Yokohama-Shanghai-Ningbo-Hong Kong-Yantian. The service then proceeds through the Suez Canal where it becomes an Asia-East Coast service called TP11/Empire/Columbus Suez.
Between Asia and the U.S. East Coast, the carriers are planning four weekly services with ships ranging in size from 8,500 TEU to 5,000 TEU.
- TP11/Empire/Columbus Suez. This string, as mentioned above, uses 16 ships, each with 8,500-TEU capacity. The rotation is Yokohama-Shanghai-Ningbo-Hong Kong-Yantian-Suez Canal-New York-Norfolk-Savannah-Suez Canal-Tanjung Pelepas-Hong Kong-Yantian-Shanghai-Busan. The ships then proceed to Seattle and Vancouver, B.C., before returning to Asia.
- TP12/America/?. This string will use 12 ships, each with 8,500-TEU capacity. CMA CGM does not list it in their presentation. The rotation is Shanghai-Xiamen-Chiwan-Yantian-Singapore-Salalah-Suez Canal-Haifa-New York-Baltimore-Norfolk-Savannah-Freeport-Bahamas-Haifa-Salalah-Colombo-Singapore-Shanghai.
- TP13/Atlantic/Vespucci. This string will use 12 ships, each with 8,500-TEU capacity. The rotation is Kaohsiung-Ningbo-Shanghai-Tanjung Pelepas-Suez Canal-Valencia-Algeciras-New York-Savannah-Charleston-Tangier-Marsaxlokk-Suez Canal-Singapore-Kaohsiung.
- TP15/Everglades/PEX3. This string will use 10 ships, each with 5,000-TEU capacity. While the other P3 services are transSuez services, the Everglades service will be via the Panama Canal. The rotation is Yantian-Ningbo-Shanghai-Qingdao-Busan-Manzanillo-Panama-Miami-Houston-Mobile-Panama Canal-Yantian.
The carriers will offer three weekly services between Northern Europe and North America. The size ships to be used on these services were not specified by MSC.
- TA1/U.S.-North Atlantic/Liberty Bridge. This service will have a rotation of Bremerhaven-Felixstowe-Rotterdam-Antwerp-Le Havre-New York-Baltimore-Norfolk-New York-Bremerhaven.
- TA2/U.S. South Atlantic-Mexico/Victory Bridge. This service will have a rotation of Antwerp-Rotterdam-Bremerhaven-Le Havre-Charleston-Freeport, Bahamas-Miami-Veracruz, Mexico-Altamira, Mexico-Miami-Savannah-Charleston-Antwerp.
- TA3/U.S. Gulf/Equality Bridge. This service will have a rotation of Antwerp-Rotterdam-Felixstowe-Bremerhaven-Le Havre-New York-Charleston-Savannah-Houston-New Orleans-Mobile-Freeport, Bahamas-Norfolk-Antwerp.
The carriers will offer two weekly services between the Mediterranean and North America. The size ships to be used on these services were not specified by MSC.
- TA5/Medusa/Amerigo. This service between the Mediterranean and the U.S. East Coast will have a rotation of Gioia Tauro-Naples-La Spezia-Genoa-Fos-Sur-Mer-Valencia-Sines-New York-Boston-Baltimore-Norfolk-Savannah-Charleston-Valencia-Gioia Tauro.
- TA6/MedGulf/MED-GUL. This service between the Western Mediterranean and the Gulf of Mexico has a rotation of Gioia Tauro-La Spezia-Genoa-Barcelona-Valencia-Sines-Freeport, Bahamas-Port Everglades-Veracruz, Mexico-Altamira, Mexico- Houston-New Orleans-Miami-Freeport, Bahamas-Sines-Algeciras-Barcelona-Gioia Tauro.
Between Asia and North Europe, the carriers plan to operate eight strings with ships ranging in size from 19,000 TEU to 8,500 TEU.
- AE1/Albatross/FAL1. MSC said this string will have 10 ships, each with 19,000-TEU capacity. (Presumably, these are Maersk’s triple-E ships, which are more commonly said to have a capacity of 18,270 TEU.) The rotation is Ningbo-Shanghai-Xiamenm-Yantian-Tanjung Pelepas-Suez Canal-Algeciras-Tangiers-Rotterdam-Bremerhaven-Wilhelmshaven-Tangiers-Suez Canal-Tanjung Pelepas-Yantian-Ningbo.
- AE2/Lion/FAL2. This string will have 16 ships, each with 11,500-TEU capacity in the following rotation: Shanghai-Ningbo-Yantian-Chiwan-Tanjung Pelepas-Suez Canal-Sines-Antwerp-Zeebrugge-Dunkerque-Southampton-Le Havre-Marsaxlokk-Suez Canal-King Abdullah-Jeddah-Singapore-Vung Tao-Nansha-Hong Kong-Yantian. From Yantian, the ships in the string participate in a loop that continues from Asia to the U.S. West Coast as the Pearl/TP6 before returning to Shanghai.
- AE5/Shogun/FAL3. This string will have 11 ships, each with 13,000-TEU capacity. The rotation is Kobe-Nagoya-Yokohama-Ningbo-Shanghai-Hong Kong-Yantian-Tanjung Pelepas-Suez Canal-Le Havre-Felixstowe-Bremerhaven-Wilhelmshaven-Rotterdam-Suez Canal-Colombo-Tanjung Pelepas-Hong Kong-Kobe.
- AE6/Condor/FAL5. This string will have 10 ships, each with 8,500-TEU capacity. The rotation is Ningbo-Shanghai-Xiamen-Hong Kong-Chiwan-Tanjung Pelepas-Port Kelang-Suez Canal-Southampton-Hamburg-Bremerhaven-Felixstowe-Zeebrugge-Le Havre-Algeciras-Beirut-Suez Canal-Port Kelang-Chiwan-Ningbo.
- AE7/Swan/FAL6. This string will have 11 ships, each with 13,000-TEU capacity. The rotation is Busan-Dalian-Xingang-Qingdao-Ningbo-Shanghai-Chiwan-Yantian-Tanjung Pelepas-Suez Canal-Rotterdam-Hamburg-Bremerhaven-Antwerp-Suez Canal-Tanjung Pelepas-Shanghai-Busan.
- AE8/Baltic/FAL7 will have 12 ships, each with 14,000-TEU capacity. The rotation is Busan-Kwangyang-Shanghai-Yantian-Tanjung Pelepas-Suez Canal-Bremerhaven-Gdansk-Aarhus-Bremerhaven-Felixstowe-Suez Canal-Singapore-Chiwan-Busan.
- AE9/Skaw/FAL8 will have 12 ships, each with 13,000-TEU capacity. The rotation is Qingdao-Ningbo-Shanghai-Nansha-Yantian-Tanjung Pelepas-Colombo-Suez Canal-Felixstowe-Bremerhaven-Gothenburg-Rotterdam-Antwerp-Le Havre-Suez Canal-Salalah-Khor Fakkan-Jebel Ali-Singapore-Chiwan-Qingdao.
- AE10/Silk/FAL9. This string will have 12 ships, each with 13,000-TEU capacity. The rotation is Xingang-Kwangyang-Busan-Qingdao-Shanghai-Ningbo-Chiwan-Singapore-Suez Canal-Le Havre-Antwerp-Hamburg-Felixstowe-Gioia Tauro-Suez-Khor Fakkan-Jebel Ali-Singapore-Yantian-Xingang.
Between the Far East and the Mediterranean/Black Sea, the three carriers plan to offer five weekly services. The size ships to be used on these services were not specified by MSC.
- AE20/Dragon/WMED1. This service has a rotation of Dalian-Xingang-Busan-Ningbo-Shanghai-Xiamen-Chiwan-Yantian-Singapore-Port Kelang-King Abdullah-Marsaxlokk-La Spezia-Genoa-Fos-sur-Mer Valencia-Gioia Tauro Port Said-King Abdullah-Jeddah-Port Kelang-Singapore-Xiamen-Dalian.
- AE11/Jade/WMED2. This service has a rotation of Quingdao-Shanghai-Ningbo-Nansha-Chiwan-Yantian-Singapore-Gioia Tauro-Valencia-Barcelona-Fos sur Mer-Gioia Tauro-La Spezia-Gioia Tauro-Marsaxlokk-Salalah-Khor Fakkan-Jebel Ali-Abu Dhabi-Singapore-Quingdao.
- AE15/Tiger/AGEX. This service has a rotation of Qingdao-Busan-Shanghai-Ningbo-Xiamen-Yantian-Chiwan-Singapore-Suez Canal-Port Said-Beirut-Istanbul-Evyap-Piraeus-Marsaxlokk-Port Said-King Abdullah-Jebel Ali-Khor Fakkan-Singapore-Yantian.
- AE12/Phoenix/PHOEX. This service uses 15 ships with 9,500 TEU capacity and is half of a service that also calls the U.S. West Coast as TP1/Eagle/PRX2. It has a rotation of Busan-Ningbo-Shanghai-Hong Kong-Chiwan-Yantian-Singapore-Port Said-Koper-Trieste-Rijeka-Port Said-Tanjung Pelepas-Chiwan-Yantian-Xiamen. The ships then sail to Los Angeles and Oakland before returning to Busan.
- AE3/Black Sea-Great Sea/BEX service has a rotation of Busan-Qingdao-Shanghai-Ningbo-Yantian-Chiwan-Singapore-Port Kelang-Evyap-Istanbul-Constanta-Odessa-Ilyichevsk-Istanbul-Piraeus-Port Said-Singapore-Xiamen-Busan.