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            november 20, 2019

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Maersk-MSC 2M alliance threatens competition


The European Shippers' Council (ESC) has warned that the 2M agreement, the alliance of Maersk and MSC, the two biggest shipping companies, should not be thought of as a benign downgrade of the banned P3 alliance, but as a threat to competition, according to Shipping Gazette.
"The gathering of the two first ship operators will create a huge player that will be in a position to have such power that they can distort the market for the purpose of price increases," ESC chairman Denis Choumert told the US Federal Maritime Commission (FMC).
"Allowing these two operators to discuss and agree on some core parameters of the services can lead to a decrease of the competitive environment of the trade concerned by this agreement," he said in his brief to the FMC, now considering whether to allow 2M to go ahead.
"Indeed, it will lead to a decrease in the number of direct calls, a decrease of service quality and surely an increase of price," said Mr Choumert's brief.
It gave the example of the requirement that the parties are authorised to discuss and agree on the allocation of terminal costs and that operators can blank sailings.
Such sailing cancellations would allow rate manipulation through the control of the supply side, the ESC said, also questioning the ability contained within the agreement for the carriers to share commercially sensitive information if "strictly necessary".
The ESC wanted a definition of what is meant by "strictly necessary" and advised the creation a control system held by the FMC that could monitor the link between capacity available on the trade and freight rates and service quality.
"It would have been great for shippers to hear about how these efficiencies would be, partly at least, transferred to customers," said Mr Choumert.
"Nowhere in the agreement are mentioned the customers and the possible improvement that this agreement will bring to the market.
"We are facing here a partnership whose only objective is to increase profit, but not improve service," he said.

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