Two of the world’s largest cargo shipping lines — Maersk and MSC Mediterranean Shipping Co. — have reached a deal that allows them to share vessels on some of the world’s busiest trade routes for the next decade. The move comes just weeks after government regulators in China nixed a wider alliance that would have included the two carriers as well as France’s enormous CMA cargo shipping line.
The new agreement — which has been given the nickname “2M” — is aimed at capturing at least some of the cost savings Maersk hoped to get out of the three-way agreement, which had been known as the P3 alliance.
No Opposition Expected This Time
Unlike P3, 2M isn’t expected to encounter regulator opposition from China or elsewhere because it is much more narrow in scope, even though it includes trans-Atlantic, trans-Pacific and Asia-to-Europe routes. China’s antitrust regulators killed the P3 plan in June after many smaller shipping companies in China and elsewhere complained they would be squeezed out of the world’s primary shipping lanes.
Officials from Maersk and MSC emphasized that the 2M deal won’t involve mutual ownership of ships and shared logistics, pricing, marketing or customer services, all of which were a part of the P3 plan. The 2M pact is scheduled to begin early next year. A spokesman for Maersk has said that the two partners have agreed to keep regulators informed about the alliances activities, but there is no formal approval process required.
Shipping Agreements Increasingly Common
These kind of agreements between cargo carriers are relatively common. In 2011, six container shipping lines formed the G6 alliance, one of the largest vessel networks linking the Far East with Europe. The CKYH Alliance, which was formed in 2002, includes Japan’s Kawasaki Kisen Kaisha, China’s Cosco Container Lines, Taiwan’s Yang Ming Marine Transport, and South Korea’s Hanjin shipping lines.
Maersk, which is based in Holland, will contribute about 110 vessels to the deal, each of which has a nominal capacity of about 1.2 million containers, representing about 55% of the share capacity. MSC will contribute 75 ships with a nominal capacity of about 900,000 cargo containers. The combined shared fleet of 185 ships is far less the 255 ships that would have been involved had the P3 pact gone through.
The benefit of the partnership is improved profitability and efficient in operations on routes across the Atlantic and Pacific oceans, as well as between Europe and Asia. The deal comes as cargo shipping companies struggle with higher fuel costs and global sluggish growth. Currently, there is a high amount of spare shipping capacity on many routes.
Move Comes as No Surprise
Lars Jensen, an industry analyst for SealIntel Maritime Analysis, based on Copenhagen, said the 2M deal comes as no surprise after the failure of the P3 deal.
“The new vessel-sharing agreement between MSC and Maersk Line is in line with the expectations following the rejection of P3,” Jensen told the Wall Street Journal. “In a broader industry perspective, we expect (vessel-sharing agreements) to be the main vehicle for new cross-carrier collaboration in the main east-west trades for the near-term future, as carriers will strive to avoid another rejection by competition authorities.”