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In the view of transport consultant Drewry, the Chinese regulators’ veto of the P3 Network last week is likely to hamper the much-needed stabilisation of the overcapacity-plagued and unprofitable ocean carrier industry.

However, Drewry’s Container Insight Weekly says that, driven by economy-of-scale cost savings, the development of formalised vessel sharing and operational co-operation between the major carriers “will not stop here”.

CIW analyses the fallout from the Chinese Ministry of Commerce (MofCom) decision to block the world’s biggest carrier alliance on the basis that the P3’s 46.7% combined market share of Asia-Europe sea trade would have infringed the country’s competition laws.

Drewry suggests the ruling, which cannot be appealed, “inhibits the carriers’ ability to reduce costs by pooling assets and controlling overcapacity” – a view seemingly also taken by disappointed investors in Maersk, which saw its shares plunge 8% after the news.

Maersk, MSC and CMA CGM were anticipating significant savings: for example, the P3’s Asia-North Europe sailings would have been reduced from the current nine loops a week to eight.

According to Drewry, the three carriers now need to “revisit their cost optimisation models, which will be a challenging task”. But as Maersk and CMA CGM were profitable without the P3, and MSC is assumed to be also, the Chinese decision is “not a complete disaster”, suggests the analyst.

Moreover, the carriers will still be free to continue their numerous vessel-sharing and slot-exchange agreements on the transpacific and Asia-Europe tradelanes, and Drewry speculates whether the carriers might still decide to run a joint service on the transatlantic route, for which the US and EU regulators have already cleared the alliance.

Meanwhile, for its rivals, including the two state-owned Chinese carriers, the blocking of the P3 “removes the threat of a very powerful mega-alliance”, but Drewry also suggests that the industry will now have an even bigger struggle to control capacity.

For the ports and terminals sector, the P3 cancellation is a mixed blessing, as it was seen as both a “risk and an opportunity” for the industry: the P3’s mighty buying power of huge volumes would have been able to influence stevedoring rate negotiations with terminals; while “new business could be won by those with the necessary resources”.

Meanwhile, following a disastrous first quarter and subsequent months when general rate increases (GRIs) were eroded within weeks of implementation, salvation would seem to rest with the latest batch of GRIs due to be implemented in July,  ahead of the crucial peak season opportunity for carriers to return to profitability,

But against the backdrop of the P3’s demise, the prospect of these GRIs sticking on the troubled Asia-Europe tradelanes have diminished, given that last week the Shanghai Containerized Freight Index shed $76 per teu for Mediterranean destinations and $82 per teu for north Europe, taking the latter’s spot rate down to just $1,120 per teu.

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