US reaction to P3 decision: ‘We’re all guessing’ U.S. shippers and port officials are still digesting the news of China’s rejection of the P3 alliance of the three largest container ship lines, and are wondering what happens next. “It’s too early to say whether it’s good, bad or indifferent. We’ll have to let the dust settle to see how it affects everything,” said Beverly Altimore, executive director of the U.S. Shippers Association, whose members include shippers of chemicals and other products. Bruce Carlton, president of the National Industrial Transportation League, said he was surprised by the decision by China’s Ministry of Commerce. “I didn’t see it coming, and I certainly didn’t predict it,” Carlton said. “I’m sure the carriers were surprised. They’d been proceeding as if it were no problem.” Carlton said, however, that he’d thought all along that Chinese approval probably represented the biggest hurdle for the P3 Network of Maersk Line, Mediterranean Shipping Co. and CMA CGM. He said the U.S. Federal Maritime Commission apparently had no legal grounds to challenge P3 in court, and that the European Union’s regulatory system emphasizes self-assessment: It assumes that companies know the rules, and that the European Commission will crack down if they’re violated. “China is not as transparent. In fact it’s quite opaque,” Carlton said. “We don’t know what criteria they used, so at this point we’re all guessing. At the end of the day, all that matters is that they said ‘no.’” Carlton said it’s hard not to speculate that China’s decision may have been rooted in concerns about the P3’s impact on China’s state-owned carriers. “Otherwise, I don’t know why they would stop it,” he said. The NITL has supported vessel-sharing agreements as a way for carriers to cut costs while maintaining service. Carlton said the P3 was an effort by the three carriers to fill their ships, much as airlines do through agreements that allow them to sell seats on each other’s planes. Now that the P3 has been rejected, container lines will have to redouble efforts to cut costs that already have been slashed through reorganizations, staff cutbacks, and reduced service, Carlton said. “I don’t know how many tricks they still have up their sleeve,” he said. Curtiz Foltz, CEO of the Georgia Ports Authority, said the decision was a setback to ocean carrier efforts to improve returns on investment, but he predicted carriers will continue to pursue alliances or other consolidation “in some way, shape or form.” “We need a healthy industry. It’s no secret that the industry has not performed well financially on the carrier side,” said Foltz, who learned of the P3’s rejection while in Shanghai on business. He said the P3 would have provided savings through economies of scale. The P3’s proposed network included calls at Savannah on three of the network’s four all-water services to the U.S. East Coast from Asia. However, Foltz noted that Maersk, MSC and CMA CGM already call Savannah. “We’ll continue to work with them,” he said. Those carriers also call Charleston, where Jim Newsome, CEO at the South Carolina Ports Authority, said he was surprised and disappointed at the rejection of P3. “I think it’s a shame,” he said. “The carriers have big ships to be deployed, and the best way to do that and maintain competition is through mega-alliances.” Richard Scher, spokesman for the Maryland Port Administration, said Baltimore officials believed that the P3 “was healthy for the industry and had the potential to reduce costs for the ocean carriers. The industry has put so much work into this alliance that it makes sense to do in some degree. It’s possible that we may see something on a different scale from the same carriers.” JOC
Posted on: Wed, 18 Jun 2014 03:56:30 +0000
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