[160714.EN.SEA] Singapore Shippers Back 2M, But Call For Vigilance Against Collusion

THE Singapore National Shippers' Council (SNSC) is urging regulatory authorities in China, Europe and the US to maintain vigilance and monitor developments concerning the new 2M shipping alliance between Maersk Line and Mediterranean Shipping Co (MSC).

The body also warned that "such agreements so easily serve as backdoors for shipping lines to collaborate to fix freight rates".

The other risk is of the 2M morphing into a larger alliance that could contravene competition regulations, following in the footsteps of the G6 and CKNYE shipping alliances formed by the other leading players.

"We have seen this in the G6 and CKYHE," said the SNSC, according to Lloyd's Loading List. "We should guard against the possibility of 2M morphing into a 2M++."

Nonetheless, the SNSC still supports a decision by regulators to clear the 2M so its two members could share vessel space and operate joint services in a way that helps curb over-supply through capacity management.

More reassuringly for Asian shippers, the 2M would control less market share than the earlier proposed P3 Alliance that also included CMA CGM, which together dominated the top three spots in the global container shipping industry.

The council said 2M was a "cut above" the P3 alliance blocked by Chinese regulators as it would have controlled a huge market share on affected trade lanes.

"Shippers are agreeable to vessel sharing agreements and joint services amongst carriers as long as they remain vehicles to improve efficiency, increase reliability, enhance port coverage and reduce costs," said SNSC.

The European Shippers' Council last week expressed concern about the new 2M alliance and called on the European Union's competition watchdog to monitor its effect on pricing, capacity changes and service quality.

Global Shippers' Forum secretary general Chris Welsh said vessel sharing agreements must not allow lines the potential to eliminate effective competition.

Said China Shippers' Association vice-chairman Cai Jiangxiang: "We need to investigate whether their market share will be above 30 per cent. If they're able to utilise capacity, they could grab 60 per cent."

Said Asian Shippers' Council past chairman John Lu: "So long as the agreement is accepted by the market, it will be good news because it will provide better services, with more sailings and services to more ports."

Source : HKSG.