Low market share could fast-track Ocean Three approval

Antitrust consent for the Ocean Three alliance may be granted by the Federal Maritime Commission without the need for a 45-day review period.

Container lines CMA CGM, China Shipping and United Arab Shipping Co hope the relatively low market share of their alliance will clear the way for early approval that will enable the trio to start operating joint services in the east-west trades within a few weeks.
Analysts believe the alliance will avoid a lengthy evaluation process because of the modest size of the consortium compared with the 2M alliance of Maersk and Mediterranean Shipping Co which was authorised by the Washington agency earlier this month, albeit with certain conditions attached that will allow the FMC to monitor that agreement.
However, because Ocean Three’s market shares in the US trades will be below 30%, the agreement can be filed with the FMC as a Low Market Share vessel-sharing agreement that does not require a rigorous probe of the sort that 2M had to go through.
FMC commissioners voted by four to one to allow 2M to go ahead.
Although hopeful that the FMC will not conduct a 45-day review of Ocean Three, the lines have not yet received formal confirmation from Washington.
The filing, number 012299, was received on October 6 and gives details of planned vessel-sharing and slot-exchange arrangements covering the trades between Asia and the US west, east and Gulf coasts. The trio has yet to finalise future transatlantic services that would also have to be notified to the FMC.
The Ocean Three alliance was unveiled in early September after French line CMA CGM sought an alternative to the earlier P3 Network that was blocked by China, which regarded it as anti-competitive.
With Maersk and MSC then pressing ahead with their 2M collaboration, CMA CGM teamed up with China Shipping and UASC in a more loose-knit arrangement that still permits partnerships with other carriers.
The Ocean Three trio said in a joint announcement last month that they planned to offer four weekly services in the Asia-Europe trades and four in the Asia-Mediterranean trades: five weekly transpacific loops, plus one Asia-US east coast string via the Suez Canal and one service dedicated to the Gulf of Mexico.
Additional coverage in the east-west trades will continue through the slot exchange and slot charter agreements already in place with various other partners, the three lines said.
The agreement will remain in place until a member gives six months’ notice, but that can only happen after the first two years.
Ships deployed by the VSA members in the US trades will not exceed 16,000 teu nominal capacity without amendment to the agreement. Likewise, any increase in the number of ships deployed by more than 35% would also require an amendment to the FMC filing.
Other lines will also be affected indirectly by the Ocean Three agreement. For example China Shipping and UASC control space on a Yang Ming service through a slot-sharing agreement, In future, some of these slots will be available to CMA CGM, subject to consent by Yang Ming that will be offered slots elsewhere.
The parties are also entitled to sublet or exchange slots controlled under this agreement to or with any third parties with the prior written consent from the other partners.
In the US trades, the agreement covers four transpacific loops to the US west coast that consist of slot exchanges and vessel sharing. Then another loop will connect Asia to the west, east coast and Gulf coasts through a pendulum deploying 17 vessels on 119-day roundtrip voyages, with CMA CGM providing nine ships, China Shipping six, and UASC contributing two vessels.
A sixth loop, from Asia to the US east coast, will be operated by CMA CGM with slots available to the other two.