China's Approval Of P3 Alliance Not So Smooth

It appears that the executives of the proposed P3 Network combining the world's three largest container lines are starting to sweat out whether or not Chinese maritime regulators will join their U.S. and European counterparts in allowing the carriers’ P3 alliance to take effect. This article from JOC.com says that sources with knowledge of the proceedings say that it's not going so well, and even the representatives from Maersk Line, Mediterranean Shipping Co. and CMA CGM, said this week that they have no clear indication when a decision would come down.

The proposed alliance is being reviewed by the Transportation and Commerce Ministries in China.

“China’s Ministry of Transport has no problem with P3, and is waiting for the comments from the Ministry of Commerce, which does not have a timetable,” said Qi Yinliang, founder of ship.sh, China’s largest shipping industry media, based in Shanghai. Representatives of Chinese carriers had previously said they believe the alliance will be approved in China.

Several shipper groups, including in China, have expressed concern over the market power the three carriers would wield in the market. The P3 would control 42 percent of Asia-Europe capacity, 24 percent of trans-Pacific capacity, and 40 to 42 percent on the trans-Atlantic, according to the FMC.

“Members of the P3 said they will compete and will not be a monopoly, but in our experience this is not the story,” said Jiaxiang Cai, vice president of China Shippers’ Association. “They might lower freight rates when they are forming the alliance, but when they have taken market share and forced smaller players to get out of the market, they will raise the freight rates again.”

P3 sources said the process of obtaining China’s approval has not been straightforward. There would be meetings with one official where it seemed they were making progress, but then a meeting weeks later with a different individual with whom they seemed to have to have to start all over again.

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