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Is China right about “virtual” ocean carrier cartels?

By Patrick Burnson, Executive Editor
June 17, 2014

News that China’s Ministry of Commerce has withheld its approval of the P3 Network – comprising the world’s three largest ocean cargo carriers – may give shippers a reason to consider the viability of such an arrangement to begin with. Can the Chinese be right about fearing a rate-fixing monopoly?

Denmark’s AP Møller-Maersk, France’s CMA CGM SA and Switzerland-based Mediterranean Shipping Co. had good reason to believe that the alliance was a “done deal” as recently as last week. With the United States Federal Maritime Commission signing off on P3 to become effective in the U.S., and the subsequent European Commission blessings, the only remaining obstacle was China.

And as our Jeff Berman recently reported, the carriers were confident that approval was only a formality.

But China’s Ministry of Commerce – citing anti-trust concerns – noted that P3 would control 47% of the Asia-to-Europe container shipping market, and failed to demonstrate that it would bring more benefit than harm to shippers’ interest.

Meanwhile, the G6 collaboration may soon be rethinking their plans for the future. American President Lines, Hapag Lloyd, Hyundai Merchant Marine, Mitsui, Nippon, and OOCL had only agreed to join forces as a competitive alternative to P3.

With that deal quashed, mightn’t we expect more disruption in containerized shipping? In any case, the irony is that a command economy like China can reshape free market forces by creating disincentives for potential corporate collusion.

Related: China Torpedoes P3 Alliance Plans

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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