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