Savings Expected from New Containership Alliance

MSC's Diego Aponte said the alliance should help companies cope with "extremely low rates"

The new P3 alliance being negotiated by the largest three container carrier companies is expected to provide significant cost savings, company executives told Lloyd's Loading List.

"There is still a lot of work to be done," said Mediterranean Shipping Co. (MSC) vice-president Diego Aponte.

"It is not a done deal yet but I think the initiative is a good one that will bring lots of benefits to our customers and, hopefully, bring some economies to the lines as well to enable us to cope with these extremely low rates that we are facing today."

The 10-year alliance of MSC, Maersk Line, and CMA CGM is expected to start operations in the second quarter of 2014 and see financial benefits in the second half of the year.

The companies plan to work out a plan to use space on each other's ships so that all three lines can minimise waste, a response to what is seen as a need for rationalisation in a market where there are many players and prices tend to be volatile.

"The fact that three major lines are to share capacity means that the market is still difficult," said CMA CGM executive officer Rodolphe Saadé.

"You cannot stay alone - you need to team up with others."

The companies plan to create an operating committee, to consider each player's plans for growth, although they will still make their own investments in vessels and will not be prohibited from increasing capacity.

Saadé said Maersk Line brought the idea of the alliance to the two other companies, which quickly decided it "would make a lot of sense," especially given that they had already used various vessel-sharing agreements.

The alliance will include a joint operating company based in the United Kingdom to manage tonnage on East-West services, which will allow the companies to keep P3's operations separate from their individual sales, marketing, and customer service departments and help the alliance to pass antitrust regulations.

Announcing plans for the alliance last week, Maersk Line said it will have 2.6 million twenty-foot equivalent units (TEU) of capacity.