P3 alliance abandoned

Maersk, CMA CGM and MSC have dropped plans for their potentially game-changing P3 Network after China refused competition clearance.

The merger had been widely tipped to win Chinese backing following approval from Europe and the US, but in a shock announcement on Tuesday, the country’s ministry of commerce said the huge alliance may eliminate or restrict competition in the Asia-Europe market.

Maersk said in a statement it respected the decision and added: “Subsequently, the partners have agreed to stop the preparatory work on the P3 Network and the P3 Network as initially planned will not come into existence.”

It said the move would have no material impact on its expected result for 2014, but its shares dropped by as much as 8.1% following the news, its biggest drop in nearly five years.

P3 was announced last year and would have seen the partners operate a capacity of 2.6m teu this year – initially 255 vessels on 29 loops – on three trade lanes: Asia – Europe, transpacific and transatlantic.

Chinese liner industry insiders had expected Beijing’s regulators to approve the worldwide network as the country’s containership owners are too weak to provide them with a credible alternative.

South Korea has yet to rule on the alliance, but its decision is now academic.

Maersk officials told TradeWinds last week that Chinese regulatory approval was vital for P3 going live.

Feeder systems based on hub ports from Singapore to Busan were not seen as a viable alternative to direct calls in China.

“It’s on its way anyway. It’s inevitable,” said one Chinese liner shipping expert last week. “It’s not in the government’s own interest to fight against P3.”