Thursday, July 10, 2014

With P3 Freight Network Dead in the Water Big Two Container Shipping Lines Settle for Vessel Sharing

New 10 Year Arrangement Will Replace All Previous Deals with No Central Management
Shipping News Feature

SWITZERLAND – DENMARK – WORLDWIDE – The two big hitters in container shipping, Mediterranean Shipping Company (MSC) and Maersk Line are to join together in a Vessel Sharing Agreement (VSA) which will cover all the three main East-West trade lanes: Asia-Europe, Trans-Pacific and Trans-Atlantic, despite the recent rejection of the P3 Agreement by the Chinese authorities which was to see the two join up with CMA CGM in a tripartite concord moving freight under a common management structure.

The new deal, to be called 2M and expected to commence early in 2015, is conditioned by filing of information to, and in some cases approvals by, relevant maritime authorities and will replace various VSA’s the two companies currently have in place. The arrangement means around 185 vessels operating 21 strings and MSC says it will both improve network efficiency and allow for lower slot costs through better utilisation of vessel capacity and economies of scale.

The estimated capacity of the ships involved exceeds 2 million TEU with the 21 strings split as: Asia/North Europe: 6, Asia/Mediterranean: 4, Asia/US West Coast: 4, Asia/US East Coast: 2, North Europe/USA: 3, Mediterranean/USA: 2. Maersk will supply about 110 vessels to MSC’s 75 and these represent roughly a 55% to 45% TEU split whilst the VSA will not include any joint marine operations. Each party will thus execute their own operations including stowage, voyage planning and port services and the ships will continue to be operated by the two individual lines.

2M will operate for ten years with a joint coordination committee monitoring day to day management of the network and the companies stress that, whilst the VSA will provide more sailings and direct port pairs, it will not include any commercial tasks or responsibilities which will remain the responsibility of the individual lines, negating any accusations of unfair collaboration. Unlike P3, this 2M will therefore have a smaller combined market share and operate simply as a VSA without any separate independent organisation with executive powers managing the network. Mr Diego Aponte, MSC Vice President was enthusiastic about the new arrangement, saying:

“MSC is pleased to have reached this agreement with Maersk Line. It represents another positive step in our continual drive to enhance our operational network in terms of scope, scale, efficiency and reliability. Our customers will be able to enjoy these benefits alongside the world class customer service that has been the cornerstone of our business since our formation in 1970.

“The 2M Vessel Sharing Agreement will enable us to achieve significant reductions in fuel consumption, driving down the carbon footprint of our shipping operations. With sustainability a key area of focus for MSC, we’re delighted that this vessel sharing agreement will mean major cuts in emissions while simultaneously enhancing our service to customers.”