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P3 Network vessel-sharing agreement now expected to begin this fall

By Jeff Berman, Group News Editor
May 22, 2014

The much anticipated P3 Network vessel-sharing agreement, whose objective is to give ocean carrier heavyweights Maersk, MSC, and CMA CGM the ability to discuss and agree on the size, number and operational characteristics of vessels to be operated on transatlantic and transpacific trade lanes between the U.S. and Asia, North Europe and the Mediterranean, will be getting a later start than originally thought.

Originally established in June 2013, P3 had the intention of kicking off operations by the middle of this year.  But CMA CGM officials said in a statement that operations are now expected to commence this fall.

CMA CGM said that PC is subject to the receipt of relevant regulatory clearances. As LM reported in March, the United States Federal Maritime Commission (FMC) signed off on P3 to become effective in the U.S., adding that at this time the “P3 partners continue their close cooperation with competition and maritime authorities in Europe and Asia to address questions and to explain the nature of P3.”

The P3 network agreement also includes the Asia-Europe trade, which is not subject to the Shipping Act or FMC jurisdiction, but it has yet to be formally approved in Europe and China.

A Wall Street Journal report stated that if the alliance is approved, industry executives estimate the companies will control as much as 40 percent of total cargo moved in containers from Asia to Europe, and across the Pacific and Atlantic oceans. And it added that the three carriers agreed to jointly deploy 255 vessels among them, sharing capacity of 2.6 million containers along some of the world’s busiest sea routes.

What’s more, the report said P3 will allow them to cut costs by using one another’s ships and port facilities and leverage each shipping company’s geographic strengths to move cargo faster and more cheaply.

According to Drewry Maritime Research, competitors of the P3 alliance will introduce only moderate capacity growth in its forthcoming schedules between Asia/Europe and Asia/North America, but its new services are a stark reminder of the “awesome” size of Maersk/MSC/CMA CGM’s combined resources.

FMC officials said their March decision was based on a determination that the P3 Network Vessel Sharing Agreement was not likely at that time, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6 of the Shipping Act, adding that there might be circumstances which could permit the P3 agreement parties to unreasonably reduce services or raise rates that could raise concerns under section 6 of the Shipping Act.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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