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Focus on China

China blocks proposed global shipping alliance

File photo: The "Maersk Mc-Kinney Moller" container ship/AFP

File photo: The “Maersk Mc-Kinney Moller” container ship/AFP

BEIJING, June 17- China announced Tuesday that it was blocking a proposed alliance among global shipping giants due to competition concerns.

Denmark’s A.P. Moeller Maersk, France’s CMA CGM and the Swiss MSC Mediterranean Shipping Company the world’s three biggest ocean carriers announced plans for their so called P3 Network in June last year.

The aim was to use a combined fleet to cut costs on Asia Europe, trans Atlantic and trans Pacific routes.

But China’s commerce ministry said in a statement it had decided to prohibit the alliance after conducting an anti trust assessment.

The ministry said the alliance, had it gone ahead, would “have a far reaching impact on the global shipping industry and cause a high level of concern in all sectors”.

It added that the alliance would increase the parties’ “combined capacity in container shipping on Asia Europe routes” and give them a “substantial increase in market concentration”.

In response to China’s decision, the companies said they were giving up the plan.

“Today, the Ministry of Commerce of the People’s Republic of China announced that they have not approved the P3 Network,” Maersk said in a statement.

“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 added.

The decision was not expected to impact the group’s annual results, said Maersk.

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“The decision does come as a surprise to us, of course, as the partners have worked hard to address all the regulators’ concerns,” chief executive Nils S. Andersen said.

The alliance had already been approved by regulators in Europe and the United States and would have enabled Maersk to reduce costs and carbon emissions.

Andersen said he was “quite confident Maersk Line will accomplish those improvements anyway”.

The group’s shipping business has outperformed the troubled sector over the past few quarters partly due to cost cuts.

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