GSF raises further P3 concerns with FMC

11/28/2013 12:13:13 PM

The Global Shippers' Forum has once again voiced concern regarding the P3 Global Alliance – this time posing questions to the US Federal Maritime Commission (FMC) and saying that the proposed Alliance requires 'careful scrutiny.'

On 26 November 2013 the GSF tabled a further series of questions on the P3 Global Alliance with the FMC in Washington DC, in response to the Commission's Notice of November 19, 2013 accepting further public comment on the P3 Network Sharing Agreement.

The GSF has asked the FMC to pursue the questions with the P3 Agreement lines as part of its analysis into the competitive impact of the Agreement on the market, and raised a number of questions outlining concerns by shippers on the potential competitive effects of the P3. 

GSF Secretary General, Chris Welsh said:

“The P3 Network Vessel Sharing Agreement is unprecedented in its scale and scope, many of the provisions of which are open-ended according to the Agreement filed with the FMC. In the view of the GSF this may affect the commerce of the United States in its import and export trades. In light of this we believe the Agreement warrants very careful scrutiny, and sincerely hope that the questions we have posed will assist FMC staff and Commissioners in its evaluation of the P3 Agreement.”

The proposed P3 Global Alliance is between Maersk Line, CMA-CGM and Mediterranean Shipping Company (MSC); GSF had previously submitted detailed questions to the European Commission Competition Directorate in Brussels, and asked the EC competition authorities if it had commenced a formal investigation. 

Mr Welsh continued: 

"What is also different and unique is the proposed creation of a London Network Centre. Our initial assessment raises concerns about how the P3 partners can compete because of the “commonality of costs” which gives strong grounds for assuming common pricing. The more the costs are common, the greater the need for the P3 partners to demonstrate how they are going to compete on price.

"The key question is; are the P3 carriers able to demonstrate that the items that they refer to in the FMC filing: sales and Marketing, EDI, back office, paperwork and customs, sufficiently significant to allow competitive pricing?”

The questions focus on the FMC's requirement to demonstrate whether the P3 “is likely by a reduction in competition to produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost” in accordance with the provisions of the 1984 US Shipping Act as amended by the Ocean Shipping Reform Act of 1998.

Chris Welsh concluded:

While the GSF is concerned about the competitive impact of the proposed P3 Vessel Sharing Agreement, the GSF recognises that consortia and VSA’s that do not have the potential to eliminate effective competition can provide benefits to shippers in terms of enhanced efficiency, lower operating costs, increased frequency and a wider range of services available to customers.”

Jackie Langridge