Shippers blame ‘legal uncertainties’ for P3 collapse

The Global Shippers’ Forum (GSF) said yesterday’s decision by Chinese regulators to block the proposed P3 global alliance was “the result of legal uncertainties” over whether it would restrict competition.
Commenting on the collapse of the proposal, GSF Secretary General Chris Welsh said: “The unprecedented size and scale that the proposed P3 Global Alliance was going to pose competition regulators was a concern to the GSF. We had welcomed the recent monitoring arrangements for the proposals, but the P3 appears to have failed the legal hurdles under Chinese competition law which we always recognised was likely to be both an unknown factor and problematic.”
The GSF had raised its concerns on a number of occasions, stating that the agreement raises the potential for restrictions on competition arising from the unprecedented extent of commonality of costs resulting from the P3, including the potential risk of collusion on rates and capacity due to the wide-ranging scope of co-operation specified within the agreement.
The group had hoped to form the so-called P3 Alliance in order to boost the number of sailings on Asia-Europe, trans-Pacific and transatlantic routes by pooling 250 ships.
The GSF had called on international regulators to fully investigate the impact on price and service of the P3, and had asked for appropriate changes to ease competition concerns, outlining how the Alliance would “fundamentally change the structure of container shipping markets”.
In its earlier submission to EU competition regulators, the GSF had said shippers were “rightly concerned that the carriers in the P3 will be able to eliminate effective competition in key European markets, including Europe/Far East and the transatlantic”.
However, some industry observers believe China has used competition issues as a means to protect its own national interests, with carriers such as COSCO and CSCL currently facing difficult financial challenges.