The era of the Big Three (Maersk, CMA-CGM and MSC) has seemingly ended before it began with rejection by the Ministry of Commerce in China (MOFCOM) of the P3 Network service, after the US FMC and the EU signed off on the plan.
The Ministry of Commerce in China (MOFCOM) has rejected the P3 Network, scheduled to start in the autumn.
An official statement from the P3 lines says, “Maersk, MSC and CMA-CGM have now decided not to implement the P3 Network.”
MOFCOM’s decision, reported first in the UK-based containership news service PR News Service, follows a review under China’s merger control rules, and as a result of the rejection, Maersk, MSC and CMA-CGM have agreed to end P3 implementation.
According to statements from the P3 lines, “The partners take note of and respect MOFCOM’s decision and subsequently have agreed to stop the preparatory work on the P3 Network, and the P3 Network as initially planned will not come into existence.”
Also in the statement by Maersk, the line emphasises that “The lack of implementation of the P3 Network will have no material impact on the Maersk Group’s expected result for 2014.”
MSC said in its statement, “MSC will continue to review all remaining options as to how it can continue to become more cost efficient and improve its service offering in the absence of P3.
“We are disappointed by the decision of the Chinese Ministry of Commerce (MOFCOM) but will continue our efforts to operate more efficiently and provide our clients with a comprehensive and excellent service.
“MSC could have achieved these efficiencies much faster through P3, but with our investment in more fuel efficient vessels, further economies of scale will still be achieved over a period of time.”
Backing up these comments, CMA-CGM has stated, “Current maritime services offered by CMA CGM and existing co-operations are to be maintained in full, offering an excellent quality of service to customers, ahead of the peak season.
“With a presence on every continent through its network of 650 agencies, the Group will continue to deploy a strategy combining innovative transport solutions, financial discipline and excellence in customer service.
“CMA CGM is confident that it will maintain its operating performance and continue to over perform the industry.”
Although there is a possibility of big three cooperation on the Trans-Atlantic trades (EU and FMC signing off on the P3). However, the Atlantic is such a small feature of the overall concept, it’s unlikely to be pursued.
It’s far more likely that the P3 Singapore operational center, and all the rest will all disappear like sea fog under high sun.
Merger Question
Outside of the three lines, the comments have been coming in thick and fast on the rejection.
Sources have indicated that one of the main reasons behind the decision could be associated with the possible COSCO/CSCL merger.
Those sources, completely un-associated with MOFCOM, have suggested that the decision could be linked to the merger. If the P3 Network had been given the green light by the Chinese authorities, a merger of COSCO and China Shipping would be “forced to take place” in order to compete in the industry with the P3 lines.
That merger would effectively reduce the overall workforce of both companies, and that “was something the Chinese authorities would be against, as some senior management figures who might find themselves unemployed, could be closely linked with government entities in Beijing.”
Back in February, COSCO and China Shipping agreed to cooperate and share resources in business areas, including ports, logistics and shipbuilding, in addition to shipping, and many industry sources suggested this would lead to a definite merger of the two lines.
One source commented, “Why would China say no, when other authorities have said yes? There has to be some strong link here somewhere, and it has to be connected with COSCO and China Shipping.”
The Maersk McKinney docked at PTP in Malaysia.
