From SCDigest's On-Target e-Magazine
- Oct. 31, 2013 -
Global Logistics News: Details of New P3 Network Emerging
28 Planned Loops Detailed - if Network Wins Regulatory Approval; Port Winners and Losers
SCDigest Editorial Staff
In June, three of the largest container shipping firms announced plans for a new alliance called the "P3 Network."
Under the new consortium, Maersk Lines, the world's largest ocean container shipping company, formed an alliance with its two next largest competitors (Switzerland's Mediterranean Shipping Co. and France's CMA CGM) to share capacity on major shipping lanes.
SCDigest Says: |
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Between this new P3 Network and the opening of the expanded Panama Canal in 2015, global shippers will have a lot to consider over the next two years.
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At the time, Maersk said the alliance would operate a combined 255 vessels with a capacity of 2.6 million TEU. (See New Ocean Carrier Mega-Alliance May Boost Rates, Causes Concern Among Shippers.)
The announcement was made in the midst of yet another capacity oversupply which has driven rates down about 50% from their highs of more than one year ago and the impending arrival of 17 more 18,200+ TEU megaships arriving through 2016.
Interestingly and importantly, P3 will actually operate as a separate company, with former Maersk executive Lars Jensen as its CEO. It is an operating company only, meaning it will do no sales or marketing, rather simply focus on effectively running the ships and the network.
The three P3 carriers will continue to fight aggressively for every box - but that container could now be moved on a different carrier’s ship under the alliance. The hope is that boxes can be moved at lower cost and more efficiently in terms of service. By combining their volumes on a ship, the hope is also that more of the capacity of these giant vessels can be utilized than going it alone.
Of the 2.6 million TEU to be deployed, 1.1 million will be provided by Maersk, 900,000 by MSC, and 600,000 by CMA CGM. That 2.6 million TEU total represents just under 15% of the total global container fleet.
Now, additional details for the services offered by the P3 Network are starting to emerge, according to the analysts at Alphaliner.
In a recent newsletter, Alphaliner says the network will involve 28 loops embracing 30 sectorial weekly services, with a target start date in May 2014.
However, the implementation of the proposed network is conditional on the approval of the regulators – and it is unclear whether the pact will meet any regulatory resistance. Some experts believe European regulators at least will be sympathetic to the overcapacity in the industry and the challenges these three Euro carriers have had making a profit for several years as a result of the overcapacity.
That said, several shipper groups have expressed major concerns over the alliance, fearing it will reduce competition. Setting up P3 as an operating company only is in part meant to diffuse those concerns.
Maersk says that that filings to the relevant regulatory authorities in the US, EU and China have only been submitted last week.
(Global Supply Chain Article Continued Below)
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