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China Trade Specialists 

 

Turbo Maritime Agency Limited

Your Logistic Provider in South
China
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Golden Fortune Shipping
Co., Ltd.

We are now Accessible Anywhere
and Anytime
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Greaten Shipping Agency Ltd.

The pursuit of excellence
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Global Net Int'l Logistics
Co., Ltd.

One of our major propose. It's fast
and be on time!
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FESCO Lines China Company Ltd
Tianjin Branch.

We are the professional logistics
supplier you can depend on!
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Worldex Logistics Qingdao
Co., Ltd.

Logistics Service Provider
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S.F. Systems (Qingdao) Ltd

Global Vision Local Focus - "We're
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you.
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Weida Freight System Co., Ltd.

Carry your cargo with heart.
Customer's Satisfaction is our most
happiness.
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Way-Way International
Logistics Co., Ltd

Prudent, Practical, Combatant and
Innovative
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Shandong Land-Sea
International Transportation
Co., Ltd

Customers' satisfaction is
LAND-SEA's eternal pursuance!
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Jaguar Logistics Co. Ltd

Providing reliable and prompt freight
forwarding services at competitive
prices that result in Customer
satisfaction
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ESA Logistics (HK) Co., Ltd.

Your partner of choice for worldwide
consolidation, customs clearance,
warehousing and distribution or
specialty shipments.
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Lailon Enterprises Ltd

We adhere to the Principle of
"Customer First" and "Service
Best"
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Shenzhen Lancer Logistics
Co., Ltd.

Success, just beginning for us.
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Fohang Wonstar Shipping (HK) Co., Ltd.

Co-creating value with customers,
developing with employees and
promoting harmony with society.
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Sunway Logistics (Shenzhen)
Co., Ltd.

Be customer-oriented, always
putting the satisfaction of customers
first
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Wagon Shipping (HK) Limited

To provide you with immediate,
efficient, high quality service.
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Is there more to the 'Big 3' alliance than meets the eye?

 


THE world's three largest shipping lines, Maersk Line, MSC and CMA CGM, issued a joint statement earlier this week announcing a "long-term operational alliance on East-West trades, called the P3 Network", in a bid to improve customer service and operational efficiency.

But while improved customer service and a desire to increase efficiency are admirable goals, one cannot ignore the potential impact that this move could make in the wider container shipping industry. Nor can one ignore the regulatory interest that will be aroused accompanying this news.

This publication in recent months has speculated that the market is now witnessing a period of covert consolidation on the mainline trades that will ultimately leave the Asia-Europe, transpacific and transatlantic trades with a much smaller pool of service providers than what we see today.

This week's announcement from the "Big 3" certainly adds greater weight to this assertion....

   click image to enlarge

Already Maersk Line operates 15.1 per cent of the world's container shipping capacity, MSC commands 13.5 per cent and CMA CGM operates 8.6 per cent, according to Alphaliner.  

Collectively these three lines operate an astonishing 37.2 per cent of the world's container shipping fleet. As such, any major alliance particularly on the world's three major trade lanes is of great significance.

All three carriers generate most of their business and revenue on these trades, which would indicate that their market share could be even more if we broke it down on a trade-by-trade basis, particularly Asia-Europe.

Nevertheless, it is clearly stated in the announcement that while the vessels deployed on the P3 Network, which will amount to 2.6 million TEU in capacity across 255 vessels on 29 loops initially, will operate independently by a joint vessel operating centre, the three lines will continues to have fully independent sales, marketing and customer service functions.

No doubt this is said in the hopes that it will keep the attack dogs of the European Commission at bay, who will certainly be taking a keen interest in how this alliance manifests itself.

Shipping lines know all too well the heavy penalties they face for collusion. And given the huge potential market share involved with the world's three largest shipping lines operating in close connection with one another regulators will be keen to ensure that everything is above board.

With all of this said it is important to note that the agreement, as was reported in our sister publication the Hong Kong Shipping Gazette yesterday, is not expected to take effect until the second quarter of next year and is still subject to approval from the relevant regulator authorities concerned with each of the three trades.

It is also subject to final negotiations among the three carriers. But the motivation to get the deal done will be high, given the potential for significant operational cost savings.

As the deal currently stands Maersk will contribute 42 per cent of the capacity to the tune of 1.1 million TEU; MSC will deploy 34 per cent of the capacity, or roughly 900,000 TEU, while CMA CGM will contribute 24 per cent or 600,000 TEU.

Outside of the regulatory issues this news could have significant repercussions for other carriers in these three trade lanes, as one would imagine that the economies of scale advantage these three carriers will enjoy will grow to a new unprecedented level.

 

 

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