Thursday, August 21, 2014

Two Giants of Box Freight Set Date for Container Shipping Vessel Share Agreement

2M to Become Operational in Six Months
Shipping News Feature

WORLDWIDE – The vessel sharing agreement (VSA) between the world’s top two container freight operators, Maersk Line and the Mediterranean Shipping Company (MSC), in the wake of the failed P3 network, is planned to start in early 2015, pending regulatory approval from, according to Maersk, only the American authorities. Under the moniker ‘2M’, both Maersk and MSC will team up to cover the Asia-Europe, Transatlantic, and Transpacific trade routes. Maersk Group CEO Nils Smedegaard Andersen said:

“We had rejection of the P3 in the second quarter and we’ve decided to substitute that with a simpler partnership with MSC on vessel sharing on all East-West trades. It’s a simpler cooperation as we only have one partner, of course the economic benefit is also lower than it would otherwise have been but we think that this is, all matters taken into consideration, this is not a bad move. We look forward to putting this in motion in 2015.

“There has been a lot of confusion as to what we need in [the way of] approvals for this. We essentially only need the American authority’s approval in both China and Europe. This is a VSA that will be surveyed but it will not be subject to approval.

“We will lose out on some things as this is just a vessel sharing agreement whereas P3 was a closer cooperation with joint planning, so the effect is somewhat smaller, but to run it and implement it, it will be less problematic than the P3, so all in all, it’s a fair exchange.”

The VSA is predicted to benefit customers through increased port coverage and service frequency and also improve the companies network efficiency and allow for lower slot costs through improved utilisation of vessel capacity and economies of scale. During Maersk’s second quarter conference call, Andersen was asked what kind of savings is expected with the VSA, he said:

“It is a bunker cost saving, primarily driven by larger vessels and shorter sailing distances on average as we can make more direct routes and that is really all there is to it. This time, of course there are no operational synergies back-office-wise as we will continue to operate our own individual ships, so it is mainly a bunker fuel gain.”

Andersen expanded on his comment of not needing regulatory approval from China saying that within China’s legislation neither company could see any way for China to block the arrangement, but that it doesn’t mean that it will never happen. Both Maersk and MSC will only need to file the details of the agreement with Chinese authorities. China had rejected P3 as the network would account for more than 40% of Asia-Europe and Transatlantic trade but this new arrangement would be less than 30% on the same routes, said to be within the Chinese authority’s limits.