Tuesday, July 15, 2014

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Drewry: Maersk-MSC deal will become largest alliance on Asia-Europe trades

Drewry Maritime Research predicts the new vessel sharing deal between Maersk and MSC — 2M — will become the largest alliance on the Asia-Europe trades if it gains regulatory approval.

Drewry says Maersk and MSC have learned from China's objections to the P3 alliance and came up with a vessel sharing deal they hope will be approved by all regulatory authorities before 2015.

According to Drewry's Container Insight Weekly, the removal of CMA CGM from the equation brings the deal's market share down to more acceptable levels and presents a much simpler joint committee as a method to oversee the coordination of the carriers' network on a daily basis.

The lines aim to reduce costs by sharing assets more efficiently between Asia-Europe, Asia-U.S. and Europe-U.S., but since port rotations and ship sizes have not yet been announced, analysts can't predict how the market shares will change or any improved cost savings compared with the P3 proposal.

Drewry's analysts note that on the Asia-North Europe trade route, Maersk and MSC currently have a 32 percent share of all westbound vessel capacity, more than the 30 percent of the market share threshold usually allowed under the EU's consortium regulation.

Currently, Maersk, MSC and CMA CGM share four weekly schedules. 2M will provide two services between Asia and the U.S. East Coast, the same as at present.

On the U.S.-North Europe trades, 2M will operate three weekly services and will probably be the second-largest alliance in the trade lane after G6 in Drewry's estimation.

2M will not include joint marine operations. Analysts say that with each shipping line looking after its own duties, including stowage, voyage planning and port operations, service quality could be very different than what was projected by P3.

Drewry said it has consistently recorded a lower level of reliability for MSC than for Maersk Line, and its analysts call to question whether cargo shipped on an MSC ship will match the same schedule reliability as cargo shipped via Maersk Line.

Another issue, researchers say, is whether Maersk will want to continue its daily service guarantees between Asia and Northern Europe, which could create problems between the two new partners.

It is also unknown whether 2M will negotiate joint operational contracts.

Drewry says CMA CGM will now have to seriously consider a closer East-West vessel-sharing arrangement with another shipping line, with the most obvious candidates being UASC and CSCL. Analysts say the French shipping line will not be able to fill its ULCVs on its own, since it has been sharing vessels with MSC between Asia and Northern Europe, and with Maersk between Asia and the Mediterranean, since 2011.


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