FEDERAL MARITIME COMMISSION ON P3 SUMMIT

FMC will hold regulatory summit Tuesday FROM AMERICAN SHIPPER Monday, December 16, 2013 By Chris Dupin The Federal Maritime Commission will hold its Global Regulatory Summit on shipping Dec. 17. The agency confirmed regulators from the People’s Republic of China (PRC) and the European Union will attend and said commissioners will discuss global regulatory issues including carrier alliances, vessel-sharing agreements, and the impact of operational agreements on international trade. The London-based consultants Drewry said in the current issue of its Container Insight Weekly, "The current ocean carrier drive for greater economies of scale through bigger alliances has far reaching consequences for the container industry that regulatory authorities will find difficult to agree on during their forthcoming meeting.” Mario Cordero, chairman of the FMC, originally called for the summit in October to discuss plans by Maersk, MSC and CMA CGM, the world's three largest carriers, to begin operating what they call the P3 Network in the Asia-Europe, transpacific and transatlantic trades in the second quarter of next year. Since then, the so-called G6 vessel-sharing alliance has announced plans to expand into the Asia-West Coast and the transatlantic trades in the second quarter of 2014 in addition to the Asia-Europe and Asia-East Coast trades where the G6 carriers (APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK and OOCL) cooperate today. "We welcome the exchange of views with our regulatory counterparts,” said Cordero. "The shipping industry is dynamic as evidenced by the changing nature of agreements. The effects of these trends will have global implications that demand an international understanding of our changing industry." Ashley Craig, a Washington, D.C.-based partner with the law firm Venable, said he was “inclined to say, at this moment, I don't see the commission seeking an injunction on the P3." At remarks before the Washington, D.C, chapter of the Propeller Club last week, he said he felt Cordero was "potentially telegraphing to carriers, shippers and other stakeholders that the FMC was not going to try and dismantle this thing (the P3), but will probably try to strike a balance, getting the carriers to agree to more clarity, but letting the agreement take effect." Drewry said, “The G6 Alliance’s proposed expansion into the Asia/West Coast North America and North Europe/East Coast North America trade lanes in 2Q 2014 is just another step in the current process of ocean carrier schedule rationalization. More is set to come, including the merging of services, should it be approved by regulatory authorities. Greater economies of scale are required to compete against the P3 alliance and/or make a profit, not just improved frequency.” Drewry continued, “G6’s proposed alliance expansion gives the regulatory authorities much to think about, therefore, and it is far from clear if it will be approved." It said its view is that "the advantages gained through the creation of bigger alliances will outweigh the disadvantages. Shippers will get a better service, and there will still be room for sufficient service differentiation between ocean carriers.” For his part, Craig said, "From what I can put together, the PRC is digging in a bit here and likely to insist their carriers' interests are included in some way and, if not, they are going to call for substantive change or some sort of oversight." While most of the summit will be held in private, the FMC said “the public is invited to attend the closing remarks at 4:00 in the FMC Main Hearing Room."