* "P3" alliance between Maersk, MSC and CMA CGM
* Tie-up wins approval from U.S. regulators
* Critics fear it could dominate key shipping routes
* Alliance needs green light from Europe, China regulators
(Adds comments, background)
By Ole Mikkelsen
COPENHAGEN, March 21 An alliance of the world's
top three container shipping firms which could control more than
a third of the market is likely to start operating in mid-2014,
No.1 player Maersk Line said after the tie-up was approved by
The industry has been battling overcapacity since the
financial crisis because new vessels ordered before the downturn
have flooded the market. This has driven rates on the main route
between Asia and northern Europe to loss-making levels.
The proposed alliance is between Maersk Line, a unit of A.P.
Moller-Maersk, Switzerland-based MSC Mediterranean
Shipping Company and France's CMA CGM.
To cut costs, they have agreed to pool about 250 ships which
will operate on three trade routes: Asia-Europe, trans-Pacific
and trans-Atlantic. This would allow the firms, which currently
run many of their vessels only partly laden to run larger ships
- which are more fuel efficient - fully loaded.
The grouping has been criticised by cargo owners and
shippers' groups because of fears it could dominate the key
routes, pushing out smaller carriers and potentially driving up
The so-called P3 alliance will have more than 40 percent of
Asia-Europe and trans-Atlantic trade and 24 percent of the
trans-Pacific market, according to industry estimates.
The approval from the U.S. Federal Maritime Commission (FMC)
takes effect from Monday but will apply only to routes to and
from U.S. ports. The alliance still needs approval from Chinese
and European regulators before it can become fully effective.
Maersk Line said it expected to receive Chinese and EU
approval before the middle of this year. "We expect that the P3
can be started mid-2014," it said.
However, a spokesman for Joaquin Almunia, the European
Competition Commissioner said the EU was still assessing the
proposed alliance because it would exceed the 30 percent market
share allowed for shipping consortia. He could not give an
indication of when a decision would be made.
Shares in A.P. Moller-Maersk opened up 2.5 percent after
news of the U.S. approval, and were up 1.3 percent at 1527 GMT,
outperforming the main Copenhagen index which was
down 1.3 percent.
"North America and the U.S. in particular is a key shipping
market. Therefore, the decision by the FMC is a very important
step towards overall approval of P3," a Maersk spokesman said.
With a global market share of around 15 percent, Maersk Line
is the world's biggest container shipping company, while MSC
with around 13 percent and CMA CGM with around 8 percent are
number two and three respectively.
The three shipping firms plan to commit all vessels deployed
on the three routes into a joint vessel operation centre located
in London that will operate the combined fleet independently.
The U.S Shippers Association says the aim of the tie-up is
to drive out weaker carriers and increase market share.
"In the case of the trans-Atlantic, it is a short step to
the 50 percent mark and beyond, where the P3 would have a
controlling share of the market, which would be a very dangerous
and detrimental situation," it wrote to the FMC last year.
"It is just a matter of a short time before the P3 controls
the trans-Atlantic market," it said.
Analysts from investment bank Alm. Brand Markets forecast
the tie-up could lower Maersk Line's costs by up to 6 percent.
The lower costs would mainly be driven by bigger and more
energy efficiency vessels, they said.
Maersk has ordered 20 super-size vessels from South Korea's
Daewoo Shipbuilding & Marine Engineering. Four of
them were put into service on the busy route between Asia and
Europe last year, helping to lower costs per unit.
An additional 16 of the Triple-E class vessels are scheduled
for delivery during 2014-2015.
Lars Jensen from maritime analysis company SeaIntel said the
alliance operating with larger vessels and maximising
utilisation would result in significant improvements in their
unit costs compared with their competitors.
He estimates the alliance will operate with vessels that on
average are 2.000-3.000 TEU (twenty-foot equivalent unit
containers) bigger than competitors.
(Additional reporting by Keith Wallis; Editing by Pravin Char)