P3 Alliance - Sea Change in the Shipping industry

author

By: Tejaswini Manjunath --

23 April, 2015

P3 Alliance - Sea Change in the Shipping industry
ARTICLE

The problems of overcapacity of vessels & lack of cargo are forcing Liners to cancel services thus impacting the shippers. Reliability of service has been a major concern for shippers. The P3 Alliance among top 3 carriers will help solve this problem by sharing the vessel space through slot agreement, deploying the vessels on prominent routes, better utilization of vessels, improved service offering & thereby increasing profitability. The Alliance has received approval from the US Federal Maritime Commission and is awaiting approval from the European & Chinese Regulatory authorities. This Alliance will offer shippers broader coverage, improved service frequency & 100% service reliability. This article will analyze the impact of P3 alliance on the trade capacity, frequency, coverage and the impact on the lead time for shippers once operational. "P3 alliance" is a Mega Alliance formed by three European based shipping companies Maersk Line, Mediterranean Shipping Company (MSC) & CMA CGM who will contribute 42%, 34% & 24% respectively to the alliance to offer total capacity of 2.6 Million TEUs. It is expected to be functional from Q3 of 2014, subject to approval of the regulatory authorities. The Alliance is currently waiting for the approval from the European & Chinese Regulatory authorities after receiving the approval from the US FMC. The operation of P3 alliance starts with pooling in containers across major routes and sharing vessels through slot agreements. It permits the liners to retain their corporate identity and perform the sales and marketing functions independently. It improves the vessel utilization and service frequency to an extent which cannot be enjoyed while operating independently.




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