Maersk Line and two shipper partners have won approval for their P3 alliance from the U.S. Federal Maritime Commission (FMC), taking them a step closer to further approvals for the grouping widely opposed by Asian shippers.

The alliance between the world’s three biggest container shipping lines was approved by four votes to one at a meeting of FMC Commissioners on Thursday, the commission said in a statement.

The P3 alliance, unveiled last June, consists of Maersk Line, a unit of A.P. Moller-Maersk, Switzerland-based MSC Mediterranean Shipping Company and France’s CMA CGM.

The FMC ruling takes effect from Monday and will only apply to U.S. trades.

Separate approvals need to be given by the European Union and China’s Ministry of Commerce before the three partners can fully launch the P3 alliance.

Both the EU and China are expected to decide by the middle of this year whether to allow the alliance to go ahead.

The China Shipowners’ Association, including state-owned carriers China Ocean Shipping (Group) Co and China Shipping (Group) Co, and shipper groups, representing cargo owners and manufacturers, have lobbied the Ministry of Commerce seeking to block the P3 group.

“We had a meeting with the China Shipowners Association, Cosco, China Shipping and the Shanghai Shipping Exchange a month ago and all oppose it,” Cai Jiaxiang, head of the China Shippers’ Association, told Reuters from Beijing on Friday.

Shipper groups and shipping lines are opposed to P3 because they think Maersk and its partners will be able to manipulate freight rates.

“I am shocked by the FMC decision. It is unthinkable that as a watchdog organisation that they have approved such an application,” said John Lu, former chairman of the Asian Shippers’ Council, an umbrella group of 19 associations from 17 countries representing Asian cargo owners.

“I believe Chinese Government will not follow suit (in approving the alliance because state-owned shipping lines are against it)”, Lu said.

Maersk said it “would not speculate on different scenarios” if P3 was approved in certain jurisdictions and not others.


The P3 alliance, which will have a fleet of 225 container ships totalling 2.5 million TEUs (twenty-foot-equivalent-unit containers), would operate 42 percent of the capacity on the Asia-Europe route, 24 per cent on the transpacific and up to 42 per cent on the transatlantic trade, based on initial Maersk estimates.

Rival container lines could increase competition against Maersk and its two partners, said Johnson Leung, head of regional transport and industrials research at Jefferies Hong Kong.

“Often, the first reaction may be pricing. More alliance formations and orders of larger container ships may also come as responses,” Leung said.

P3 will create operational efficiencies, allow more direct port services and provide increased flexibility by matching services to meet short-term, sudden changes in demand, Maersk said.

“North America and the U.S. in particular is a key shipping market,” Maersk Line said in a statement welcoming the FMC’s decision.

While P3 could result in reduced competition on the U.S. trades, it is not likely “to produce an unreasonable increase in transportation cost or ......transportation service,” the FMC said. P3 would be closely monitored to help prevent unreasonable rate increases or service reductions.

But the FMC’s P3 agreement would allow the three carriers to dominate vessel competition and narrow shipper options at U.S. ports, said Richard Lidinsky Jr., the only FMC commissioner to oppose approving P3’s application.

“This agreement is in reality not an alliance or true vessel sharing agreement. Rather, it is in effect a merger of the top three global liner companies,” he said in a statement rejecting approval.