News / Shippers give tentative thumbs-up to 2M, but market share still a concern for China

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Shippers have broadly welcomed the proposed vessel-sharing agreement alliance between Maersk Line and MSC.

The European Shippers’ Council (ESC) has called the plan for a 2M Alliance “less worrying for shippers than the planned P3”.

And former chair of the Asian Shippers’ Council, John Lu, said it would be “good news, because it will provide better services, with more sailings and services to more ports”.

However, Cai Jiangxiang, vice-chairman of the China Shippers’ Association, which had lobbied its government to veto the P3 network, said there were still concerns about market share.

The 2M’s combined share of the trade between Asia and Europe would be above 30%, he said. “If they are able to utilise their capacity really well, they could grab a higher market share.”

However, Maersk Line chief executive Soren Skou said yesterday the 2M’s market share between Asia and Europe “would be below 30%”, and within the parameters of the European Commission’s consortia block exemption regulation from EU anti-trust rules allowing liner shipping carriers to enter into co-operation agreements and to rationalise their activities.

After public consultation, the liner shipping consortia exemption was recently extended by another five years by the EC until April 2020.

But the ESC said it was decision “we regret” and argues that even if the 2M’s market share is below the 30% threshold, it is still sufficient to be of concern and to require careful monitoring by EU competition watchdogs.

The ESC suggested that the performance monitoring conditions sought by the US FMC for the P3 “would be sufficient to reassure shippers in some aspects”.

Notwithstanding that the P3’s 40%-plus market share proposal had been approved by European regulators before hitting the buffers in China, the ESC added: “Furthermore, a centralised notification system should be created to ensure that shippers get service modification (including transit time and port calls) long enough in advance to be able to take these modifications into consideration in their transport plan.”

Indeed, one of the biggest gripes expressed by shippers to The Loadstar is the lack of notice and communication regarding blanked sailings.

On the sidelines of the recent TOC Container Supply Chain event in London, Kuehne + Nagel’s intra-Europe trade manager, Helge Neumann-Lezius, said blanked sailings gave his company “a major headache”.

He said: “My biggest complaint is the lack of notice. We sometimes only get a few days’ warning [of a blanked sailing] from the carrier, and this can put massive pressure on the supply chain.”

Having had their fingers badly burned by the rejection of the P3, one would expect Maersk and MSC to have taken some very good soundings – specifically in China – on the prospects for the success of their new plan.

Meanwhile, the Shanghai Containerized Freight Index of spot rates from Asia this week plunged by $114 per teu to North Europe, to $1,302, and by $133 per teu to Mediterranean ports, to $1,567, confirming the continued need for carriers to drive for better vessel utilisation and economies of scale.

Indeed, taking out costs and improving efficiency were the reasons given by Maersk and MSC for forming the 2M alliance.