Tapping P3’s potential

   At first glance, the proposed P3 Network of Maersk, Mediterranean Shipping Co., and CMA CGM — the three largest container carriers in the world — may better stand for the “Powerful 3,” conjuring thoughts of cartels and monopolies in the minds of shippers.
   Indeed the operations agreement would initially provide 255 ships in 29 strings with 2.6 million TEUs of capacity on three trade lanes: Asia-Europe, transpacific and transatlantic. Among the top carriers found throughout these trades, there could be instances of the P3 having dominant market share among certain East-West services.
   The enormous size and scope of this agreement is worthy of a close look by the U.S. Federal Maritime Commission and other foreign regulators to make sure it doesn’t operate in a way that harms shippers or damages competition. If shippers have any concerns about the alliance, they should speak up now.
   However, as long as the partner lines are not colluding on pricing, it’s unlikely the regulators will try to stop it. Besides, the three lines, which are fiercely competitive by nature, will continue to have independent sales, marketing and customer service functions. If the carriers lock horns, the alliance will surely dissolve.
   There are also plenty of competing vessel-operating or sharing alliances already on the seas, including the Grand Alliance of Hapag-Lloyd, NYK, and OOCL; New World Alliance of NOL, MOL, and Hyundai; G6 Alliance which combines the GA and NWA members; and the Green or CKYH Alliance of COSCO, “K” Line, Yang Ming, and Hanjin, and regulators, in addition to most shippers for that matter, have shown little interest to stop them.
   The P3 Network will surely help the three giant liners more easily manage the introduction of capacity from the soon-to-be-launched largest containerships in the East-West trades. What business — carrier or shipper — needs any more chaos from mishandled vessel container capacity?
   In addition to the market stability promised by the alliance, shippers should benefit from a richer offering of weekly sailings and port coverage, all under the watchful eye of regulators and industry associations. Most importantly, shippers will be able to continue to negotiate their service contract rates with each of these three carriers. Rates may even remain depressed as the P3 Network partners absorb the new ultra-large containership capacity, cascade older but still hefty-size ships to other trades, and other lines alter their alliances.
   In the end, the market should, and will, dictate the long-term success of the P3 Network, as well as other increasingly larger liner carrier alliances.