Up To Speed?
Here’s what we said about the P3 Alliance in Vol. XXXVII, Art. 13 – just two weeks ago: “Did you get that? ‘Drewry doesn’t believe the group poses a threat to shippers.’
“It’s hard to believe that they can’t see the real reason(s) for that unholy alliance. For one thing, an attempt to corner the market like that by giant corporations in the U.S. wouldn’t get by the Federal Trade Commission. Those three carriers have two thoughts in mind: first, drive the little guys out of business. And secondly, with them out of the way the big boys can raise freight rates to the world’s consumers.
“It’s what they call a monopoly, and monopolies are always harmful. This one will backfire though because the world economy is in free fall” …
And here’s what Drewry said yesterday: “Drewry: P3 Alliance to increase sailing speeds”
“According to Drewry Maritime Research, the P3 Alliance partners – Maersk Line, MSC and CMA CGM – are aiming to improve average headhaul ship speeds as a group, dashing the hopes of rival carriers who may have been planning on slow steaming to save costs.
“Drewry’s latest issue of Container Insight says that if the P3 Alliance is sanctioned by regulators, starting the second quarter of 2014 the P3’s average vessel speed from Asia to Northern Europe will be 19.5k, and ship speed on the return journey will increase slightly from 14.4k to 14.7k. Other container lines will be forced to follow the lead of the P3 and increase speeds in order to try to compete with the alliance, the publication said.
“Drewry says the P3Alliance will put pressure on other carriers to spend more money on fuel, even though the benefits of such strategy are unclear. At the recent Intermodal 2013 conference, some shippers asked why container lines did not try to sell themselves through increased speed rather than price. Carriers say when this was tried in the past, shippers generally declined to pay a ‘speed premium.’
“According to a recent survey of 1,600 shippers carried out by APL in the U.S., the most important feature of ocean carriers’ services is schedule reliability, while transit time is fairly low down on the list.
“P3 says it will offer a faster transit time from Asia to continental Europe via the AE12Phoenix schedule, which will be a significant improvement on Maersk/CMA CGM’s existing service since it eliminates Beirut. While the travel time from Shanghai to Trieste will still be 27 days, it will be five to seven days faster than to Hamburg/Bremerhaven.” –
Drewry added that “‘yawning imbalance between supply and demand’ will leave those giants with ‘terminated contracts’ and empty ships.” [Like we said, “… the world economy is in free fall.”]