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Approval of Proposed P3 Network Alliance will Extend Further Into 2014

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Supply Chain Matters provides a follow-up to the proposed alliance of the three top ocean container shipping lines, in what is being termed as the P3 Network.

Our last posting in late November regarding the proposed P3 alliance noted that a summit of global regulators including European, United States and China would be held to scrutinize the proposed alliance and to discuss objections from other market interests. The implication that as much as 43 percent of ocean container shipping from Asia to Europe, 24 percent from Asia to the United States, and 41 percent of trans-Atlantic routings would be impacted is cause for obvious regulatory concern.

Today’s Wall Street Journal cites sources with direct knowledge of the discussions that occurred on Tuesday of this week as indicating that that all three regulatory bodies are likely to approve the alliance, but not before demanding concessions to limit any dominance over certain global shipping routes.  The report further indicates that timing of approval may well not come until much later in 2014. The WSJ noted that Chinese regulators have yet to receive necessary documents from the three subject shipping lines, with the China approval process normally taking an average of 5 months after receipt of all paperwork. The U.S. Maritime association is also expected to seek added information from the three carriers.

Additional provisions to protect smaller competitors, fuel providers and cargo owners are likely to be included in any final approval according to the report. The report confirms that freight forwarders, importers and exporters are actively campaigning to block the alliance.

We tend to believe that these parties have read some of our recent blog commentaries regarding the industry.

Thus, as noted in Prediction 8 of our 2014 Predictions for Global Supply Chains, turmoil in ocean transport is likely to continue well into next year as the various regulatory processes involving the P3 or other proposed alliances will drag-on seeking further input from vested parties.

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