FMC: 2M shows no signs of anti-competitiveness in U.S. liner trades

The Federal Maritime Commission said its detailed monitoring of the Maersk-MSC alliance in the east-west liner trades has “raised no red flags.”    Regular and detailed monitoring by the Federal Maritime Commission of the recent vessel-sharing agreement between ocean carrier giants Maersk Line and Mediterranean Shipping Co. shows no signs of anti-competitive activity in the U.S. liner trades.
   Bob Blair, an economist in the FMC’s Bureau of Trade Analysis, in a meeting on Wednesday told the commission that based on analysis of data provided by the two liner carriers about their alliance activities and the agency’s review of the market structure, including concentration and the absence of barriers to new entry, plus “expected supply and demand conditions in relevant trades,” he does not see any signs of price collusion or reduction in competition in the market. 
   Blair said the 2M Alliance has “raised no red flags” of anti-competitive practices and if the carriers tried to collude on rates and capacity that it would be “extremely difficult to establish, maintain or hide” from the agency.
   “They remain competitors,” he added.
   Maersk and MSC started the 2M last December by offering six weekly services between North America and Asia, five weekly services between North America and Europe, and 11 weekly services between Europe and Asia. Their focus has been in the east-west liner trades.
   The 2M agreement, announced in early 2014, is a scaled-back agreement of a formerly proposed three-way alliance between Maersk, MSC, and CMA CGM. That tripartite alliance was dropped after objections were raised by Chinese regulators, in part because of the large market share it would have created, along with its proposed vessel-operations center.
   The FMC’s Chairman Mario Cordero and commissioners – Rebecca Dye, Richard W. Lidinsky Jr., Michael A. Khouri, and William P. Doyle – concurred that the agency should continue to monitor 2M’s activities, but overall believe the VSA is having a positive impact on the liner market.
   The 2M has brought about economies of scale in the U.S. liner trades, contributed to lower container transportation costs to the American shipping public and reduced ship-borne air pollution in U.S. ports, Cordero said.
   Lidinsky quipped that with carriers ordering ever-larger containerships for their fleets, capacity control is not currently a major concern for the FMC or shippers, adding that it seems “carriers can’t control themselves with capacity.”