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Monday, 24 June 2013 00:00 - - {{hitsCtrl.values.hits}}
The P3 Network will operate a capacity of 2.6 million TEU (initially 255 vessels on 29 loops) on three trade lanes: Asia – Europe, Trans-Pacific and Trans-Atlantic.
Globally the shipping community has expressed concerns, as the formation of a giant group coming in initially as a hardware sharing group may end up becoming a huge threat to global competition and affect the freight markets and small shippers.
Over the last week the Global Shippers’ Forum (GSF) in London has taken the matter up seriously and has already taken action to write to global regulatory bodies to start looking into the proposed P3 Network which is scheduled to start operations in 2014 subject to obtaining the approval of relevant competition and other regulatory authorities.
The Global Shippers’ Forum has already put up an official statement on the P3 dated 21 June 2013 to be shared with shippers worldwide.
In a further development at the Golden Jubilee of the European Shippers’ Council (ESC) in Brussels on 19 June 2013, shippers from Europe and Asia expressed their deep concern at the recent announcement of the new MSC, Maersk and CMA alliance ‘P3’. They viewed that this cooperation should in no way jeopardise or impair the free choice of shippers and fair competition based on price, service level and routing.
The giant formation would not only have consequences on shippers, but international port operators and terminal operators too will have increasing demand and price negotiations as the big three will control a very large percentage of global seaborne containerised cargo volumes.
The question remains to be seen, how the global regulators will look at the new developments. The biggest worry is for Asian countries that do not have proper monitoring or regulatory mechanisms for shipping. The largest numbers of small shippers are based in Asia and it is doubtful that they would enjoy any benefits from these indirect mergers of giants when it comes to pricing as they have experienced over the last decade. They probably will try to increase freight rates and surcharges.
Capacity could be manipulated through discussions in an indirect way; secondly, it would be a struggle to smaller shipping lines to service in a market that would be dominated by a few. Therefore governments must look at these developments and ensure better competition is retained in the global transport industry dominated by shipping. Otherwise consumers and manufacturers may have to pay a hefty price.
[The writer is the CEO of the Shippers’ Academy Colombo (SAC) and former Chairman of the Sri Lanka Shippers’ Council, and Association of Shippers’ Councils of Bangladesh, India, Pakistan and Sri Lanka (ASCOBIPS) and the immediate past Secretary General of the Asian Shippers Council (ASC).]
