By Brian Dunn

It’s no secret the global economy is taking its sweet time returning to pre-recession levels of activity and shipping rates and deliveries are being bruised along the way. That’s why the recently announced P3 east-west service alliance by Maersk, CMA CGM and MSC is scheduled to launch in the second quarter of 2014. It will be based on existing capacities of each member providing a total capacity of 2.6 million TEUs in 29 loops on three trade lanes: Asia – Europe, Transpacific and Transatlantic, which will provide customers with more stable, frequent and flexible services.

“It was based on necessity. The simple fact is the global (shipping) market is not as vibrant as it was in the early 2000s,” explained MSC Canada President Sokat Shaikh. “We have to look at our cost structure and look at ways that offer cost reductions. The economy is not growing which puts pressure on freight rates and this offers economies of scale and should generate better revenues.”

The P3 service will have no impact on Canadian operations which are not focused on Asian lanes, added Mr. Shaikh who noted MSC has expanded its portfolio of offerings in the Canadian market, pointing to increased service from Port Saint John. Originally operating a biweekly service when it was launched in April, 2012, it has become a weekly service due to the success of its Montreal – Saint John – Caucedo, Dominion Republic route. And it’s more than just a topping off stop from Montreal. “We see tremendous growth potential there as we continue to develop business opportunities. Our primary exports are forest products, seafood products which are seasonal, and food products produced by McCain Foods Limited.”

For the six months of 2013, container traffic tonnage at Port Saint John already doubled last year’s numbers for the same period, in no small part due to MSC. In addition to container traffic being up, the number of TEUs is also up 70 per cent, according to Port Saint John’s President Jim Quinn. “With the addition of MSC’s presence along with Tropical Shipping, we’ve gained a fair amount of attention and we want to make sure people are aware of these options. We’re broadening our customer base by offering shippers and receivers in New Brunswick and other regional markets new choices,” added Mr. Quinn.

As a private company, MSC does not release financial results, but Mr. Shaikh said it has not been forced to downsize due to weaker market demand and in fact has expanded its global network. “I don’t think there’s a single carrier that can match us to and from any of the Canadian ports we serve to over 350 ports globally. We have moved forward positively on the branding of MSC in Canada and will continue to do so slowly over the course of time.”

MSC’s recent decision to sell 35 per cent of its Terminal Investment Ltd. (TIL) to Global Infrastructure Partners and a group of its LP Co-Investors (GIP) was another strategic move, said Mr. Shaikh. The projected US$1.93 billion cash flow it will generate will allow the company to invest in other parts of the business while it retains majority ownership in TIL. “We’re looking at investing on the liner side and this gives us some stability. We’ve grown to 43 terminals and we will still maintain majority ownership in them.”

As for when the global shipping industry will rebound, there’s still no silver lining on the horizon, according to Mr. Shaikh. “We’re looking at the global economy from a very humbling perspective. We see slow and stable growth of between 2 and 5 per cent at best, which is not optimistic. We will stay in the storm and ride it out.”