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Saturday Sep 21, 2024
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At the ASC we have reasons to be concerned about the proposed formation. As an alliance it is too big. With 255 vessels totalling 2.5 million TEUs, the P3 will be dominant in the eastwest trade – 42% of the Asia-Europe trade and 50% of Asia-Mediterranean trade – and 24% on the trans-Pacific trade.
“Such concentration of capacity is untenable. We fear for the worst should the regulatory authorities give its approval,” said ASC Chairman John Y. Lu.
If approved, P3 will be far bigger than any other carriers in terms of the number of ships, size of ships, sailing frequency and port coverage, ensuring the P3 alliance partners with unmatched economies of scale and coverage. It will accelerate the demise of smaller players.
“With fewer service providers, we can only imagine what effect this will have on freight rates and service levels,” Lu added.
If the competitors were to attempt to match P3 by ordering bigger ships and expanding the fleet size, as some analysts predict, it would worsen the supply-demand imbalance, with all the negative implications. Rather than bring stability we fear that P3 will bring about more price wars and rates volatility.
“Businesses like certainty to allow us to plan ahead but the shipping environment is anti-certainty. Already shippers have to put with fluctuating freight rates, longer lead times and service cancellations!” said Greater China Area Convenor and China Shippers’ Association Vice Chairman Cai Jia Xiang.
Audacious P3
While the agreement exists only in principle, the alliance is moving forward even without getting the regulatory approvals. Offices are being set up in London and Singapore – the two centres with no regulatory oversight – and the service rotation was announced on the MSC website. There has also been a string of articles justifying the need for P3 in the media.
It is so audacious that FMC’s Commissioner Richard A. Lidinsky, Jr recently remarked, “It is clear this alliance is moving forward as if it has already met regulatory approval despite the lack of any significant filing with regulatory authorities in Europe, China or the US. Pushing behind the scenes and placing positive stories with the press is not a substitute for proper consideration of the consequences of this massive carrier alignment.”
“The P3 is not a done deal – not by a mile – whatever the alliance may think. We are delighted that the FMC has initiated the meeting of regulatory authorities, which we understand from press reports can happen by mid-December. The regulatory authorities are right to look long and hard at the details of the P3 Alliance,” said Lu.
P3 will be one of the key subjects at ASC’s forthcoming annual meeting, which will be held in Shenzhen on 9 December.
The Asian Shippers’ Council (ASC) was formed on 13 September 2004 to integrate shippers’ councils in Asia into a single entity to protect and promote the collective interests of Asian Shippers. It consists of 19 shippers’ councils from 17 countries in Asia – Korea, China, Hong Kong, Macau, Taiwan, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Australia, New Zealand, Bangladesh, India, Pakistan and Sri Lanka, with affiliate shippers’ councils in Africa.
