Business

Chinese block big shipping alliance

A recent decision by the Chinese government to block a proposed alliance among the world’s three largest container shipping lines may ensure further competition in ocean transport between Asia, Europe and the U.S.

The three shipping lines, Maersk, CMA-CGM and MSC, beset with overcapacity and falling shipping rates, had proposed getting together to coordinate schedules, reduce excess sailings and set common rates. The Chinese government in rejecting the alliance, said the alliance would have too much power and could diminish the competitiveness of Chinese products in foreign markets.

The three shipping lines were following a trend among big ocean transport companies. Other major players have already formed alliances of their own for the same purposes as the proposed P3 alliance. Had the P3 won Chinese approval, three alliances would have dominated most world shipping.

At the ports of Tacoma and Seattle, commissioners have become increasingly concerned about the financial muscle these large alliances were creating to drive down port rates and limit potential customers to less than a handful of large alliances.

Some industry observers suggest the three shipping lines may still be able to cooperate on trans-Pacific routes because their dominance on those routes is less than the 50-plus percentage share they have in the Asia-Europe trade. Tacoma’s largest container line customer, Maersk, moved to Seattle four years ago when it formed a smaller trans-Pacific alliance with CMA-CGM.

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