Was the P3 Network Dead In the Water to Begin With?

By Patrick Burnson, Executive Editor
June 18, 2014 - SCMR Editorial

The potential P3 partners –comprising ocean cargo giants Maersk, MSC, and CMA CGM – may have believed that they were just steps away from realizing their “network” dream. But industry insiders suggest that China’s veto power should not have been dismissed so quickly.

“China’s state-owned shipping companies, COSCO and China Shipping Group, were against the P3 operating agreement all along,” says Rosemary Coates, president of Blue Silk Consulting and author of Rules for Sourcing and Manufacturing in China. “Although the P3 alliance was similar to the airlines practice of code sharing, it represents a threat to China’s own shipping lines.”

Coates allows that the P3 alliance would have made the carriers more efficient and eventually drive down costs.  Indeed, P3 partners argued that this would be the outcome from discussing and agreeing 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.

“But this would be too much competition for the Chinese lines, that have been losing money for several years and are struggling with over-capacity issues,” she says.
Coates maintains that this is just the beginning of China’s “showing muscle” on the world stage. 

“With the growing dominance of the Chinese economy, we are bound to see many more rejections of business deals that are unfavorable to Chinese business.”

Meanwhile, industry analysts believe that many of our world’s port authorities must be relieved. With the anticipation of massive freight aggregation, only the Mega ocean cargo gateways were anticipating more business. That would leave the smaller seaports battling one another for direct inbound carrier calls.

According to SeaIntel Maritime Analysis in Copenhagen, any terminal or port that were to be affected by P3’s network design “could potentially face huge losses or gains in their business.” This even included the ports of Los Angeles and Long Beach, as it had yet to be determined if one or both San Pedro Bay gateways was to receive Network calls on a regular or alternate basis. 



About the Author

image
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).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

With a 1.1 cent drop to $3.858 per gallon, this follows declines of 2.5 cents, 1.9 cents, and 0.7 cents over the previous three weeks, with the cumulative four-week decline at 6.2 cents.

Second quarter revenue for transportation and logistics titan UPS headed up 5.6 percent annually at $14.3 billion, while operating profit sank 57.1 percent to $747 million. Quarterly net income fell 57.6 percent to $454 million.

Panjiva, an online search engine with detailed information on global suppliers and manufacturers, recently said it is opening up the “vault,” so to speak. The vault in this case is making its copious amount of trade data accessible through an Application Programming Interface (API), which enables customers to extract Panjiva’s trade data into their own database.

Article Topics

News · Ocean Cargo · Shipping · China · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.