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Another Alliance of Major Shipping Lines Gets More FMC Scrutiny

Friday, January 17, 2014
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission voted Jan. 15 to request more information on a proposal to expand the G6 Alliance Agreement among six major ocean carriers. Currently this agreement authorizes the parties to share vessel space with each other and also to enter into cooperative working arrangements in the trade between Asia and the U.S. On Dec. 2 an amendment was filed with the FMC that would extend this cooperation to the major east-west trades, including between Asia and the U.S. West Coast and between Northern Europe/Mediterranean and all U.S. coasts.

The G6 proposal follows an effort to create the P3 Network Vessel Sharing Agreement, which would authorize the world’s three largest container carriers (which are different from the G6 carriers) to share vessels and engage in related cooperative operating activities on routes between Asia and Europe, Asia and the U.S., and Europe and the U.S. Early estimates put the market control of such an alliance, which participants want to launch this spring, at about 42%, 24% and 40-42%, respectively.

The FMC is taking more time to investigate both the G6 and the P3 agreements due to concerns about their effects on consumer interests, the U.S.-flag international fleet, small businesses, suppliers, and third parties such as terminals, vendors and bunker operators. The FMC notes that the P3 agreement proposes an initial deployment across all U.S. trades with an annual capacity of 130 vessels that range in capacity between 4,000 and 12,250 twenty-foot-equivalent units, with an eventual expansion to a maximum of 180 vessels of up to 19,200 TEUs. By contrast, the expanded G6 agreement calls for the operation of 180-220 ships with a maximum capacity of 14,000 TEUs, as well as the operation of one or more service centers.

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