Carrier groups get ready to duke it out on global trade lanes
Container shipping’s new mega alliances are all positioning themselves for a running start once their proposed tie-ups jump through the regulatory hoops.
News on the alliances dominated headlines this week, topped by Evergreen joining the CKYH alliance on Asia-Europe. Taiwan’s top carrier joins Cosco, "K" Line, Yang Ming and Hanjin, adding an “E” to the new CKYHE alliance.
The CKYHE will start in mid-April with six joint services between Asia and Northern Europe, and four loops dedicated to the Asia-Mediterranean route.
Close on the heels of that announcement was news that the G6 alliance has planned a host of transpacific and transatlantic services. The expansion will see the alliance - APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK and OOCL - offering 29 services on a network that covers all three major east-west trades.
Then there is the P3 network of Maersk Line, CMA CGM and MSC. The greatest scrutiny is falling on this alliance. Regulators in the EU, Germany, the US, Korea and China are trying to establish whether the giant partnership will contravene competition laws.
Objections from liner customers concerned that the P3 will dominate the market and force up rates and from suppliers fearing they will be squeezed even further have caught the attention of regulators always eager to tackle the big players.
Fuelling the objections is the sheer size of the P3, which will operate 252 container vessels with a total capacity of 2.6 million TEUs on the Asia-Europe, Asia-US West Coast and transatlantic trades from the second quarter of this year.
If approved, the P3 will control around 43 percent of the Asia-Europe market, 41 percent of the transatlantic and 24 percent of the transpacific.
The G6 carriers will have about 22 percent of the Asia-North Europe trade and 41 percent of the transatlantic market. All the P3, G6 and CKYHE members are in the world’s Top 20, and the 14 lines in the three alliances have a market share of over 70 percent of global container traffic.
However, the alliance members point out that they may be partners in services, but all services will be marketed individually as operating alliances, not pricing cartels. Shippers will be able to ask for tenders from each carrier and forwarders will seek freight rates from individual lines.
The US Federal Maritime Commission plans to give its yay or nay on the P3 next month some time and a decision from China and Korea regulators is not expected until after that. The EU … well … who knows how the EU works. Now that the CKYHE alliance proposal has landed on their desk on top of the P3 and G6 files there may be a bit more back-’n-forth before any decision is made.
And that can only happen once role players and stakeholders have been consulted and consensus is reached on matters of mutual concern. Only then can a balance be found between the interests of all parties that addresses individual issues and ensures a level playing field without moving the goal posts.