US Federal Maritime Commission Approves Ocean Carrier Alliance

According to the officials, the US Federal Maritime Commission has approved the planned vessel alliance of Maersk Line and Mediterranean Shipping Co., the two largest ocean carriers.

The ocean-shipping regulatory agency’s action is one step in the plan by No. 1 ocean carrier Maersk, a Danish company, and the Italian steamship line known as MSC to share space on their vessels to reduce costs on the world’s busiest freight routes linking Asia, Europe and North America.

MSC and Maersk formed their alliance, known as 2M, after a larger plan that also included third-largest ocean operator CMA-CGM of France was scuttled by Chinese regulators. Last month, CMA-CGM advanced a new alliance called Ocean Three with China Shipping Container Line and United Arab Shipping.

Although 2M and Ocean Three each are smaller than P3 would have been, cargo owners and smaller shipping companies are skeptical of the alliances, fearing that the big competitors’ control of freight rates across all major routes might eventually drive smaller companies out of business.

Regulators outside the United States still haven’t ruled on the 2M plan.

According to Wall Street Journa, the 2M pact will control 35% of the Asia-Europe trade loop and 15% and 37% of the cargo moved across the trans-Pacific and trans-Atlantic routes, respectively.

That alliance and Ocean Three are expected to bring some stability to freight rates. Smaller competitors, which now regularly undercut prevailing prices, likely will be forced out of the Asia-Europe loop, unable to compete with the combined might of the alliance partners.

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