Of­fi­cials from China, Europe, US re­view planned con­tainer al­liance

China Daily (Hong Kong) - - BUSINESS MARKETS - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

Mar­itime of­fi­cials from China, the United States and the Euro­pean Com­mis­sion held their first joint meet­ing on Tues­day in Wash­ing­ton to re­view the pro­posed P3 Net­work, a pool­ing ar­range­ment among the world’s three largest op­er­a­tors of con­tainer ves­sels.

Den­mark-based A.P. MollerMaersk Group, Mediter­ranean Ship­ping Co SA of Switzer­land and French car­rier CMA CGM SA agreed in June to es­tab­lish the long-term op­er­a­tional al­liance on East- West routes to op­ti­mize re­sources and lower the cost of con­tainer ship­ping.

The al­liance will op­er­ate to­tal ca­pac­ity of 2.6 mil­lion 20-foot equiv­a­lent units, ini­tially us­ing 252 large-ca­pac­ity ves­sels on 28 loops on three trade lanes: Asia-Europe, trans-Pa­cific and trans-At­lantic.

Mario Cordero, chair­man of the US Fed­eral Mar­itime Com­mis­sion, said the rapidly chang­ing face of the global mar­itime sec­tor de­mands “outof-the-box” think­ing and gov­ern­ments should share their views on global reg­u­la­tory chal­lenges and the im­pact on in­ter­na­tional trade.

While the P3 Net­work ves­sels will be op­er­ated in­de­pen­dently by a joint ves­sel op­er­at­ing center, the three ship­ping com­pa­nies will con­tinue to have fully in­de­pen­dent sales, mar­ket­ing and cus­tomer ser­vice func­tions.

The net­work center and P3 Net­work in­tend to start op­er­a­tions in the sec­ond quar­ter of 2014, sub­ject to ob­tain­ing the ap­proval of rel­e­vant com­pe­ti­tion and reg­u­la­tory au­thor­i­ties.

Luo Ren­jian, a re­searcher at the In­sti­tute of Trans­porta­tion Re­search un­der China’s Na­tional De­vel­op­ment and Re­form Com­mis­sion, said un­like ship- shar­ing deals among smaller-sized ship­ping com­pa­nies, the es­tab­lish­ment of the P3 Net­work will en­cour­age Euro­pean car­ri­ers to grab more mar­ket share from Chi­nese com­pa­nies.

“Bat­tling over­ca­pac­ity and fierce global com­pe­ti­tion, Chi­nese liners are strug­gling to make a profit. Mean­while, the gov­ern­ment has stopped of­fer­ing sub­si­dies for con­tainer ves­sels built in do­mes­tic ship­yards,” Luo said.

Global reg­u­la­tion was part of the agenda dur­ing the di­a­logue, along with net­work, ship-shar­ing and op­er­a­tional agree­ments for in­ter­na­tional trade.

The mar­itime com­mis­sion pro­vided a gen­eral brief­ing on the 45-day agree­ment re­view process and con­tin­u­ing mon­i­tor­ing pro­gram.

As all th­ese com­pa­nies are Euro­pean-owned, the EC has ex­pressed its sup­port of the al­liance and said the net­work will ben­e­fit ship­pers by im­prov­ing ser­vice stan­dards.

How­ever, ship­ping com­pa­nies in China and the US strongly op­pose the pro­posal.

Since 90 per­cent of China’s for­eign trade is seaborne, and the coun­try has de­vel­oped a world­wide ship­ping in­dus­try, Chi­nese com­pa­nies such as China Cosco Hold­ing Co Ltd and China Ocean Ship­ping ( Group) Co have urged the China Shipown­ers As­so­ci­a­tion to raise con­cerns about the P3 Net­work and the im­pact on com­pe­ti­tion.

Li Hongyin, head of the Chi­nese del­e­ga­tion and deputy di­rec­tor- gen­eral of the bureau of wa­ter trans­port at the Min­istry of Trans­port, said the sus­tain­able growth of the mar­itime sec­tor has great sig­nif­i­cance for China and global ship­ping mar­kets.

The three par­ties have a com­mon duty to pro­tect the sound de­vel­op­ment of mar­itime trans­port, Li said.

The three ship­ping gi­ants have a com­bined 37 per­cent of global ca­pac­ity for con­tainer ves­sels, ac­cord­ing to the Shang­hai In­ter­na­tional Ship­ping In­sti­tute.

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