G6 box carriers expand operations to head off P3 threat to east-west trades

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The members of the G6– a merger of the New World and Grand Alliances – have announced plans to go head-to-head with the P3 network by expanding their operation to service all the east-west container tradelanes. .

Subject to regulatory approval, the new G6 operation will deploy around 76 ships across 12 services and connect 27 Asian ports to US west coast ports. It will operate a further 42 ships across five transatlantic loops servicing the US east coast and west coasts, Canada, Panama, Mexico and north Europe, which will include two pendulum services.

The move by G6 members Hapag-Lloyd, OOCL, NYK, APL, Hyundai Merchant Marine and MOL will be seen in the industry as a reaction and challenge to the P3 network of Maersk Line, MSC and CMA CGM, which is just beginning the process of gaining regulatory approval.

The G6 Alliance – formed in 2011 to counter the threat of the time-guaranteed Daily Maersk product – said the expanded co-operation would provide customers with “more service choices and increased sailing frequency” – on the Asia-US west coast trade, for example, each G6 member would offer “almost twice as many sailings”.

A statement released today said: “The proposed expansion will complement our existing services in the Asia-north America east coast and Asia-Europe trades, allowing us to deploy the most suitable ship for each loop across the trades.

“With greater service flexibility and operational synergies, the G6 Alliance will have an even more resilient and robust network – giving shippers a wider coverage area and shorter transit times without reducing the total capacity.”

The G6 deployment of  240 vessels on east-west tradelanes will almost match – in number, if not size – the P3’s deployment of 255 ships.

However, the P3 alliance will still enjoy a 46% market share dominance on the Asia-Europe trade, where it will operate ships of an average nominal intake of 12,700teu compared with the G6’s average of 11,600teu.

Indeed, even if the G6 was to combine its forces with the CKYH Alliance, another rival grouping operating between Asia and Europe, analysts have calculated that it could still not offer a network or scale to match the P3.

However, it is on the transpacific and transatlantic trades where the G6 carriers obviously believe they can at least match the P3, which under its proposal would have a market share of just 27% of US trades.

G6 member OOCL is known to favour large-scale operational mergers, and at the company’s half-year results briefing acting chief financial officer Alan Tung said of the P3 that in essence it was no different to the G6. He said:  “The P3 is a significant event in the market. It is three, rather independently minded, carriers coming together. This combination really allows them to further rationalise themselves and offer, possibly, a better product which at least matches the G6 product.”

Meanwhile, unlike the P3 network proposal, there are so far no plans announced to form a separate independent tonnage centre to operate the G6 network, a factor that may or may not count in its favour with the regulators.

This week, US shipping regulator the Federal Maritime Commission (FMC) has set the date for its global summit, after shipping legislators from Europe and China confirmed their attendance. It is set to take place on 17 December and will address carrier alliances, vessel sharing agreements and the impact of these on international trade.

FMC chairman Mario Cordero said: “We welcome the exchange of views with our regulatory counterparts. The shipping industry is dynamic, as evidenced by the changing nature of agreements. The effects of these trends will have global implications that demand an international understanding of our changing industry.”