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Global Shipping Trio To Form Alliance

A trio of top global container shippers will join forces in Q2 of 2014 to provide what they say will be better service to customers using East-West oceanic trade routes — Asia to Europe, and routes to the US from Atlantic and Pacific ports.

The three maritime freight shippers are the Maersk Line, Mediterranean Shipping and CMA-CGM.  Their new entity will be called the P3 Network and will operate out of executive offices in London and Singapore, with a staff of about 200.

Lars Mikel Jensen of the Maersk Line was appointed CEO.

Once the operation is up and running, it could dominate about 42 percent of the Asia to Europe market, 24 percent of the Pacific route and as much as 42 percent of the Atlantic route, according to estimates from Maersk.

No revenue forecast is yet available, but the take could be in the billions of dollars.

Shipping capacity of the P3 Network will be substantial, with total container vessels from the three lines at 255 on 29 loops, and with a combined 2.6million TEU (Twenty-foot Equivalent Units) available for cargo.

On the marketing side, the P3 Network says it will provide shippers with more stable, frequent and flexible services, and more reliable weekly departures than the total provided previously from each of the freighter lines.

Cancelled sailings and the negative impact on seasonal apparel sales at shipping destinations should be reduced, says the P3 Network.

All of the above sounds very good for both the P3 Network and their customers.

But regulatory officials in the US, Europe and China have not okayed the P3 Network merger and are worried about the effects on current shipping services for both sea lines and their customers, and for both shipping and receiving port terminals.

Retailers and manufacturers take note: especially significant, according to regulators, is the reduction to 255 vessels from the 346 vessels now plying the routes in question.

Basic economics predict higher prices when essential services become scarcer, in this case, reduced capacity.

Accordingly, regulators in the EU and China have been invited by US Federal Maritime Commission chairman Mario Cordero, to a global regulatory summit in Washington, DC, to discuss the impact of the P3 Network.