US Regulators To Decide On P3 Alliance By End Of March

The proposed merger of Maersk, MSC and CMA CGM will be decided by U.S. regulators by March 24th.

Last week the Federal Maritime Commission (FMC) announced that they will release their decision on the proposed merger of Maersk, MSC and CMA CGM by March 24th, finally putting to rest the speculation surrounding the three company's proposal to form a super-sized container shipping vessel sharing network. Late last year the FMC requested further information from the three carriers, termed the P3 Alliance, which they turned in last week, setting up the new deadline as the FMC must give its decision within a 45-day window.

The FMC will also consider public comments amounting to over 100 pages, sent to Washington in the run-up to the deadline for potential P3 customers and competitors, and ports and politicians.

This article in The Loadstar points out how there is some speculation that those who wrote in support of the alliance used some sort of template that had been circulated throughout the sea freight industry using the same list of five points in support of the P3Most of these submissions are from individual shippers, forwarders and non-vessel operating common carriers, as well as ports and politicians representing areas where a port is a significant employer. 

The Med-America Shippers Association, a grouping of European wines and spirits producers and US importers and alcohol retailers, wrote in against the P3, worried that the reduced number of port calls would lead to more transhipment and a greater chance of cargo temperatures fluctuating and reduced shelf-life.

It also believed that, despite the three carriers’ insistence that sales and pricing would remain distinct, that it will lead to price fixing.

“They will ultimately all be selling the same service, which will be hard to differentiate simply by marketing different brands. Thus, as their operations converge more and more, it is likely that they will be capable of influencing the competition in the market,” said the National Industrial Transportation League in opposition of the merger. “The P3 agreement clearly is designed to permit future agreements between the carriers on a wide variety of matters that have the strong potential to impact competition and the rates and services provided to shippers.”

The US Shippers Alliance (USSA) produced an extraordinarily detailed opposition document, and while it acknowledged that the shippers could see better service levels and lower rates, it added: “The fear among shippers is that the negative consequences of the P3 Alliance will substantially offset any gain, and will lead, in the near future, to shippers being caught in the P3 carriers’ vice grip, resulting in sliding quality service, higher rates and fewer available liner choices.

“These three mighty carriers would not be even considering the alliance if the changes that it will bring about would be in any way detrimental to themselves. They are only proposing it because it will give them power and control over the competition and over the beneficial cargo owners that they do not now hold.”

To read more, click HERE.