Newly Formed P3 Alliance Set To Stabilize Container Industry

cma cgm marco polo container shipThere have been a number of shipping companies who have indicated that they will raise their concerns to authorities in the European Union and the United States and scrutinize the outcome of the new P3 alliance with Maersk Line, MSC, and CMA CGM, which is considered the most extensive co-operation within the container industry; ever. Nevertheless, the alliance is actually not expected to reduce the level of competition on the key routes between Asia and Europe. Instead, the three companies will retain their existing market shares while none of their main competitors are expected to exit the market entirely.

Analysts have examined that the creation of the P3 alliance and agree that the network could lead to more stable market relations within the industry, and introduce a better balance between supply and demand. Additionally, although the P3’s vast size of the total market share between both Europe and Asia, the alliance could result in a lower rate level in the long term; if the three companies let their customers benefit from the carriers’ significant unit costs. Currently, the three companies collectively control approximately 102 container ships with over 10 thousand TEU capacity, which translates into approximately 56 percent of the total global fleet of these mega-ships. Furthermore, these three shipping industry leaders are expecting an additional 28 vessels to be delivered, within the next two years.

Although the P3 alliance carriers are expected to rationalize some of their services, capacity reductions are not expected because the large newbuildings will replace smaller ships, on the east-west routes. The analysts also predict that the super P3 alliance will most likely deploy almost all of their 130 ships (with capacities above ten thousand TEU) on Asia-Europe and the Pacific routes, while the P3 alliance on the routes between the Far East and North America will have lesser coverage in relation to the services; which the two other alliances G6 and CKYH offer. Lastly, it is widely believed that the alliance will stabilize the shipping and container industry for the better. As well it is hoped that this approach will increase competition within the sector, that will in turn promote steady growth and introduce business and investment opportunities that re-instill confidence in the international container shipping industry.

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