P3 Network’s Threat
Korean shipping companies are expressing concerns over the emergence of the P3 Network, an alliance of the global top three shippers. They are arguing that the P3 Network, once launched, will account for 50 percent of the Asia-Europe trade routes, violating the Fair Trade Act. The Korea Shipowner’s Association (KSA) is planning to respond to the situation in cooperation with the China Shipowner’s Association (CSA).
The KSA submitted a petition to the Fair Trade Commission on March 3, claiming that the P3 Network corresponds to an M&A for restricting competition. The CSA also claimed that the network could have a negative impact on the international shipping market. The FTC is currently examining the potential effects of the network through negotiations with the authorities concerned.
The P3 Network’s members are the Maersk Line of Denmark, MSC of Switzerland, and CMA CGM of France. It is scheduled to be launched in the second quarter of this year through an M&A review in each of the countries.
Hanjin Shipping and Hyundai Merchant Marine, the two largest shipping companies in Korea, have a membership in industrial alliances such as CKYH and G6, but they just share the slots. The P3 Network members, meanwhile, share their vessels, fuel, ports, and slots.
Besides, the average tonnage of the container carriers of the P3 members amounts to 13,000 TEUs, whereas that of the vessels of CYKH and G6 stands at below 10,000 TEUs. The larger a vessel is, the less fuel costs and port charges are. Their slot ratio is 36.9 percent, but the percentage rises to close to 50 percent when it comes to the Asia-Europe routes.