News

ESC comments on agreement between MSC & CMA CGM

Tuesday, 06 December 2011

The recently announcement of the agreement between MSC and CMA CGM to combine their services on key trades has generated much interest and concern among European shippers. Reflecting on this announcement, Jean-Louis Cambon, Chairman of the Maritime Transport Council at the European Shippers' Council said: "The merging of their services on the routes identified demonstrates two things: the lack of volumes in the market as a consequence of the economic crisis and the difficulties of managing to utilise the vessels they operate; and secondly, that in order to compete for supremacy head-on with Maersk Line they need to join forces.

"Whereas the cooperation is of an operational nature, vigilance is required to ensure that the arrangement remains an operational cooperation and does not restrain capacity beyond what would be justifiable during a slack season." Echoing the views of other commentators on the issue, Mr Cambon noted that two of shippers' main concerns over the CMA CGM-MSC agreement lay in the possible effect on competition and fear of reduced services: "Shippers will quite naturally worry about the possible dominance of the new liner shipping pact, making the second and third largest carriers in the trades the biggest. With competition based on market share alone, shippers are now being confronted by two mega-carriers on some of the most important trade lanes in the world today. That has to be a worry for shippers looking for service and price differentiation.

"On a more positive side", commented Mr Cambon, "this development is no doubt prompted by the need to compete efficiently in the market, aligning the most suitable vessels for each trade. Shippers are setting the agenda around better service quality.

Maersk Line recently revealed plans for development and focus around customer needs. So, one should expect this new alliance to take up the challenge also. I have said before, and repeat again, that the true success of the Daily Maersk service announced this autumn, will unravel when competing operators launch similar products, confirming the emergence of a new market with different service clusters, much in the same way as the express parcel industry developed. The challenge is there for the CMA CGM and MSC to present the benefits of their alliance to their customers in terms of improved service reliability and quality.