The European Shippers’ Council (ESC) said the new vessel-sharing agreement (VSA) between Maersk Line and Mediterranean Shipping Co. (MSC) may be lesser in scope than the disbanded P3 alliance, but it still effectively garners more than 30 percent of the Asia-Europe market, a development that it said should not be overlooked by European maritime regulators.
In a reaction statement, the ESC said that while this type of vessel sharing agreement “is less worrying for shippers than the planned P3,” which was more integrated and had a huge market share of the east-west trades, nonetheless, “even with only Maersk & MSC, the carriers reach around 35% of market shares between Asia and Europe which is still very important and can cause some wonderings.”
On July 10, MSC and Maersk announced the signing of a VSA on the east-west trades that will consist of 185 vessels with an estimated capacity of 2.1 million TEUs deployed on 21 strings in the Asia-Europe, Europe-U.S. East Coast, and Asia-U.S. East and West Coast trades.
The ESC, representing freight transport businesses in Europe, said that the 35 percent share “is enough to require some railing from competition authorities.”
It added that the measures earlier proposed by the U.S. Federal Maritime Commission for regulating the P3 should also be applied to the new VSA to sufficiently reassure shippers.
“Focus should clearly be put on the monitoring of capacity modification and its impact on rates,” it continued. “Furthermore, a centralized notification system should be created to ensure that shippers get service modification in advance” so they can adjust their transport plans as well.
“We continue to advocate a deeper involvement of ‘EU competition watch dogs,’” the ESC said, adding that the “free choice of shippers” should remain the “highest priority.”
The new VSA between Maersk Line and MSC will be referred to as 2M and have a duration of 10 years.
The VSA is expected to start in early 2015, with the starting date depending on “the filing of information to and in some cases approvals by relevant authorities,” said Maersk Line in a statement.
The Danish shipping firm added that “the overall purpose of the cooperation is to share infrastructure (network).”
Maersk Line and MSC “will be able to provide their customers with more stable and frequent services, cover more ports with direct services. The VSA will improve the efficiency of the Maersk Line and MSC networks through better utilisation of vessel capacity and economies of scale,” it added.
“I am very pleased with our agreement with MSC. We share the same ambition to have as efficient and effective operations as possible. We will continue to provide our customers with competitive and reliable container shipping in the East-West trades at attractive prices. To do so we have to be innovative and take out cost, while keeping a product that is best in class for our customers in terms of coverage, frequency and reliability. Our agreement with MSC is a step towards achieving all of these objectives in the East-West trades,” said Søren Skou, Maersk Line CEO.
Maersk Line said the 2M VSA differs from the earlier proposed P3 alliance in two ways: the combined market share is much smaller, and the cooperation is a pure VSA with “no jointly owned independent entity with executional powers.”
The 21 strings are split as follows: Asia-North Europe, 6; Asia-Mediterranean, 4; Asia-U.S. West Coast, 4; Asia-U.S. East Coast, 2; North Europe-U.S., 3; and Mediterranean-U.S., 2.
Maersk Line will contribute about 110 vessels with a nominal capacity of 1.2 million TEUs (55 percent of the total capacity).
MSC will contribute about 75 vessels with a nominal capacity of 900,000 TEUs (45 percent of the total capacity).
Maersk Line said the vessels deployed in the VSA will continue to be owned, or chartered, and operated by the two individual lines.
The VSA does not include joint marine operations. “Each party will thus execute their own operations including stowage, voyage planning and port operations,” it continued.
A joint coordination committee will monitor the network on a daily basis.
For its part, MSC said the agreement “represents another positive step in our continual drive to enhance our operational network in terms of scope, scale, efficiency and reliability.”
Diego Aponte, MSC vice president, said the 2M VSA will “enable us to achieve significant reductions in fuel consumption, driving down the carbon footprint of our shipping operations.”
Earlier Maersk Line, MSC, and CMA CGM, the world’s three largest container shipping lines, announced an end to their intended operational cooperation P3 after Chinese competition authorities rejected it on the grounds that the alliance would dominate Asia trade and would thus restrict free competition.
Photo: torbakhopper
