The Federal Maritime Commission acknowledges China’s objection to P3 Network

Having given the P3 Netork its blessing some time ago, The Federal Maritime Commission (FMC) has acknowledged China’s objection to the alliance.

At the same time, however, the FMC says future carrier collaborations should not be ruled out.

“Ocean carrier vessel space alliances offer the potential benefit of cost savings and environmental efficiencies that come from coordinated deployment of newer, larger vessels,” says FMC chairman, Mario Cordero. “The FMC, in evaluating such agreements, will continue to balance those benefits with the potential harm from a concentration of decision-making power in terms of port coverage, sailing schedules, and necessary trade lane capacity.

As reported here last week, the FMC’s Chinese regulatory counterpart, the Ministry of Commerce (MOFCOM), nixed the P3 Network Vessel Sharing Agreement, calling it “uncompetitive.”

The agreement between A. P. Moller-Maersk A/S, CMA CGM S.A., and MSC Mediterranean Shipping Company, S.A. would have authorized the parties to share vessels and engage in related cooperative operating activities in the trades between the U.S. and Asia, North Europe, and the Mediterranean.

In March 2014, the FMC concluded extensive review of the Trans-Pacific and Trans-Atlantic effects of the P3 Agreement and determined that the 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(g) of the Shipping Act.

P3 Agreement parties would have been subject to specifically tailored monitoring reports to ensure compliance with the Shipping Act once the agreement became operational. The Commission’s decision remains in effect absent a withdrawal of the agreement by the parties.