* Maersk abandons ship pooling plan after China veto
* P3 alliance involved Swiss firm MSC and France's CMA CGM
* Maersk sees no material impact on 2014 results
* Shares end down 5 pct
(Adds details, comments, background)
By Ole Mikkelsen
COPENHAGEN, June 17 Denmark's A.P. Moller-Maersk
has abandoned a planned ship pooling network after
China's Ministry of Commerce surprisingly announced it had not
The idea, known as P3 and announced last June, called for
the company along with Swiss firm Mediterranean Shipping Co
(MSC) and France's CMA CGM to pool about 250 ships to
"This is very negative for Maersk. They won't achieve about
$1 billion in cost savings, equivalent to 5 to 6 percent of unit
costs," analyst Jacob Pedersen at Sydbank said on Tuesday.
Maersk shares, which had surged earlier this month to a near
seven-year high of 14,560 crowns, closed down 5.3 percent
compared with a 0.7 percent fall in the Danish benchmark index
China's Ministry of Commerce said in a statement it did not
believe assurances put forward by the companies involved in P3
would be enough to protect the interest of consumers.
The decision is in contrast to views taken in the United
States and Europe.
In March the U.S Federal Maritime Commission decided to
allow the network agreement to become effective in the United
States and on June 3 the European Commission said it had decided
not to open an antitrust investigation into the deal.
Maersk admitted it had been taken aback by the Chinese
stance on an agreement it thought would command general support.
"It's a big surprise. We definitely had the impression that
this went in the right direction," Chief Executive Nils
Smedegaard Andersen told Reuters.
Andersen said P3 would have enabled its container shipping
unit Maersk Line to make reductions in costs and CO2 emissions.
"Nevertheless, I'm quite confident Maersk Line will
accomplish those improvements anyway," Andersen said, adding he
did not expect the lack of implementation of the P3 Network to
have a material impact on Maersk Group's expected results for
While the container shipping industry as a whole has
struggled to make money in a market with too many vessels and
too few goods to move, Maersk Line has improved earnings the
last five quarters.
P3 had been criticised by cargo owners and shippers' groups
because of fears it could dominate key trade routes, pushing out
smaller carriers and potentially driving up prices.
The alliance would have had more than 40 percent of
Asia-Europe and trans-Atlantic trade and 24 percent of the
trans-Pacific market, according to industry estimates. Its
abandonment sends the Danish group back to the drawing board in
its quest for efficiency measures, analysts said.
"Maersk may have been planning to utilise some of its P3
partners' vessel capacities to continue to upsize its fleet,"
analyst Bonnie Chan at brokerage Jefferies wrote in a note to
clients. "Without the P3 alliance, the company may now have to
invest more in the container shipping segment."
At shipping association BIMCO, analyst Peter Sand wrote in a
note: "With direct consolidation being absent, the troubled
industry is likely to seek new ways to improve earnings at a
point where it is necessary to bring back profitability beyond
the level of survival."
(Additional reporting by Shida Chayesteh and Brenda Goh;
Editing by David Evans and David Holmes)