By Mike Wackett
Still awaiting regulatory approval from China, the EU and other jurisdictions, the world’s three biggest container lines have pushed back the launch of their vessel-sharing P3 network until the fall. This second postponement of the Maersk/ MSC/CMA CGM co-operation, which when it was unveiled in June 2013 targeted a start this month, brings a welcome if temporary respite to the beleaguered boxship charter market.
The confirmation was contained in AP Møller-Maersk’s first-quarter 2014 report, and was later confirmed by French ocean carrier partner CMA CGM.
The economy of scale advantages that Maersk Line, MSC and CMA CGM will enjoy over the rest of the pack looks frightening – especially given that even without the P3 network cost savings, Maersk Line posted a $454 million net profit in the first three months of the year and said it was confident of exceeding its 2013 result of $1.5 billion.
APMM Group Chief Executive Nils Andersen revealed that a significant factor in Maersk Line achieving a 9 per cent quarter-on-quarter ($259 per 40ft) unit cost saving was a $47 million reduction in time charter costs.
No doubt some of this was achieved from lower daily hire rates – a consequence of the delivery of many ultra-large containerships on Asia-Europe tradelanes that forced the cascading of hitherto workhorse vessels onto other trades, rendering displaced vessels redundant.
Maersk Line currently operates 296 chartered vessels – more than half its 564-ship fleet – and, with its proposed P3 partners, dominates the charter fixture lists. Indeed, in the past month, time-charters agreed by brokers with Maersk, MSC and CMA CGM accounted for two-thirds of the container fixtures reported. However, the P3 partners are preparing for the vessel rationalisation advantages of the proposed network, and although they could get even better daily hire rates by fixing for a year or more, the agreements being made are generally for three months with a three-month option.
Mr. Andersen confirmed this flexible strategy when he said: “We can redeliver a large number of our chartered-in ships in a short time-frame” – adding “but we need the vessels”.
Assuming that the mega-alliance launches in the fall, the year-end could see a considerable swelling of the idled containership fleet.
Reprinted courtesy of The Loadstar (www.loadstar.com)