Shipping majors allay fears of SA alliance

SA shipping lines can set their minds at rest because there seems little chance of the mighty three-line alliance (Maersk, MSC and CMA CGM) extending their combined forces onto the SA trades. This fear was expressed to FTW by two shipping line executives (who wanted their names withheld) after news came out that the three lines intended, in 2015, to join forces on the main line trades of Asia–Europe, trans-Pacific and trans-Atlantic with their P3 Network of 255 ships totalling 2.6 million TEU capacity. Their concern was that if this was a successful triumvirate, then the trio might decide to implement this type of three-way practice on other trades. And if these ever included SA, the sheer existing might they currently hold on the local trades would, when added together, create a near-monopoly on our main trades to Asia, Europe and the US. But this is not a practical idea, according to Glenn Delve, director of MSC and Arnaud Thibault, MD of CMA CGM and Delmas in SA. “My purely personal opinion,” said Thibault, “is that this big ship-sharing alliance relates specifically to these three trades where mega container ships are employed. And all three of us have them. “On smaller trades, like SA, I don’t really see that this type of alliance would work.” Delve agreed. “I shouldn’t think it will go further than these three trades. The alliance is a tentative rationalisation to mitigate the losses – which are enormous. This type of alliance would increase our economies of scale.” “Then, from an SA perspective, I don’t see this agreement applying. The market’s not really big enough to think about it. And you’ve got to remember – we’re fiercely independent.” Asked if the consortium that is proposed bears a resemblance to the conferences of old, the two rejected such a comparison. As Thibault told FTW: “I see it as a purely operational, ship-sharing agreement. As such, I don’t think that’s a flash-back to conferences.” But the sheer muscle that the three exert on the named trades also raises a query. According to the AXS Alphaliner list of liner capacity among the 100 largest container shipping companies, the three carriers collectively own or charter ships with about 6.4 million TEUs of capacity or about 37% of the world container fleet of 17.3 million TEUs. So the new alliance involves about 40% of the three carrier’s combined tonnage and about 15% of the world container fleet. Also, according to figures from Drewry Container Forecaster Quarterly Reports and AXS-Alphaliner, Maersk holds a 21% capacity share of the Asia-Europe westbound trade, MSC 11% and CMA CGM 10%. That’s a cumulative capacity share of 42%. And those figures were compiled before the three lines started introducing their new 16 000-18 000- TEU class of vessels on this main trade earlier this year. Making the threat even more compelling, Maersk alone has orders in for 20 of the massive 18 000 TEU Triple E superships. The top 20 carriers have always dominated the big ship market – already controlling 100% of ships over 6 000 TEUs as far back as 2006. But their average vessel size has since ballooned by 43%, from 2 941 TEUs to 4 200 TEUs in 2012, including vessels as large as 16 000 TEUs, and with Maersk’s giants yet to be delivered. All this, said authoritative shipping sources, could mean that the three-line alliance will fall foul of European Community (EC) regulations – relating to consortia agreements in all the EU trades. In September 2009, the EC renewed and modified its regulations granting a conditional block exemption from Article 101(1) of the EC Treaty for specific concerted activities of carriers operating in consortia agreements. Among the most substantive modifications to the regulations, the EC reduced the market share threshold by which consortia are block exempted from 35% to 30%. The revised regulations will remain in effect till April 2015 – about the time the three carriers propose to kick off the alliance.