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The decision of the world’s three largest shipping lines to abandon their proposed alliance after China refused to grant approval on Tuesday is seen as a relief to shippers and shipping lines.
Chinese Commerce Ministry on Tuesday said it would not approve the shipping alliance called P3, formed by Denmark’s AP Moller-Maersk, France’s CMA-CGM and Switzerland’s Mediterranean Shipping Company.
The global network of P3 — an alliance that would have reshaped global shipping — was expected to start operation later this year. The US and European regulators had already approved the alliance and only the Chinese decision was pending.
Small players Shippers and smaller shipping lines were worried that the coming together of the three giants will eventually drive smaller players out of business. Shippers in several countries were opposing the alliance saying it would kill competition.
Though India was not directly covered by the P3 network, its impact would have eventually been felt by the country’s trade, said R Venkatesh, Vice-President, Western India Shippers Association.
A large volume of India’s international cargo is being transshipped through port of Colombo, Singapore and Dubai. All the three shipping lines operate services to and from Indian ports.
The three lines together control more than 40 per cent of the global cargo. Concentration of such capacity will not be in the interest of shippers, said Vanketesh. “We have been opposing cartels in the service sector which pushes up freight rates affecting the country’s trade.”
The alliance, proposed a year ago covering the US, Europe and Asia, includes sharing of vessels and ports. Smaller lines, particularly liner service operators were worried that these giants would deploy larger capacity vessels and offer lower rates to grab the cargo. Though there is excess capacity in the market, these liners have been deploying larger vessels of 16,000-18,000 teus capacity. “We, like other smaller players in the liner business, are relieved,” said an official of Shipping Corporation of India, the only Indian container shipping service operator.
A shipping agent however, said the alliance promised better services and that would have helped global trade.
Liner freight rates have been ruling rock bottom level for long and the alliance would have helped stabilise the rates.
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