New mega-alliance will stabilize container industry

The co-operation between Maersk Line, MSC, and CMA CGM is the most far-reaching and concentrated alliance the container industry has ever seen. In the long term, the new P3 alliance could lead to lower rates, estimates Alphaliner.

Even though a number of shipper groups have indicated that they will urge the relevant authorities in the EU and the U.S. to scrutinize the consequences of the new P3 alliance with Maersk Line, MSC, and CMA CGM – the most extensive co-operation within the container industry ever – the alliance is not expected to reduce the level of competition on the key routes between Asia and Europe. In broad outline, the three carriers will retain their existing market shares while none of their main competitors are expected to exit the market entirely.

This is the assessment found in Alphaliner’s newsletter on Tuesday. The analyst firm estimates that P3’s competitors will explore the opportunities for further operational integration through formal arrangements on select routes and other arrangements in order to compete more effectively with the world’s three biggest container carriers.

Like other analysts, Alphaliner estimates that the creation of P3 could lead to more stable market relations within the industry on the strength of a better balance between supply and demand. Additionally, despite P3’s staggering size of the total market share between the two continents, the alliance could result in a lower rate level in the long term if the three carriers let their customers benefit from the carriers’ significant unit costs.

Alphaliner notes that Maersk Line, MSC, and CMA CGM have previously worked together in the transpacific trade since April 2008, while MSC and CMA CGM started a co-operation on routes between the Far East and Northern Europe in December 2011. However, none of these arrangements are anywhere near the scale of the new P3 alliance.

Today, the three carriers control 102 container ships of over 10,000 teu corresponding to 56 percent of the total global fleet of these mega-ships, and the three shipowners will get further 28 units delivered within the next two years.

Although the P3 carriers are expected to rationalize some of their services, capacity reductions are not expected, seeing as the large newbuildings will replace smaller ships on the east-west routes, Alphaliner estimates. The analyst firm also writes that P3 will probably deploy almost all of their 130 ships of above 10,000 teu on Asia – Europe and the Pacific routes.

The P3 alliance will be particularly dominant on Asia – Europe, while P3 on the routes between the Far East and North America will have lesser coverage in relation to the services which the two other alliances G6 and CKYH offer.