FBJ 4 FREIGHT BUSINESS JOURNAL
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Issue 5 2014 - Freight Business Journal FROM THE EDITOR
The decision to abandon the P3 alliance between Maersk, CMA CGM and MSC in mid-June took
the industry by
surprise. What was also remarkable was the speed with which the three lines involved issued a statement saying that the plan was abandoned – probably before many people had seen the announcement by China’s commerce ministry that it had come out against the plan. There was no suggestion of further negotiations or representations – the deal was off, full stop. Either the lines are very afraid of China – entirely possible – or perhaps some of the P3 participants already had a back-up plan. This was confirmed three weeks later, when Maersk and MSC unveiled plans for a less ambitious vessel sharing agreement.
By Chris Lewis
He question now is, where does this lead the other member of the proposed P3 alliance, CMA CGM. While the French-based carrier is still a very big player by any standards, is any single line quite big enough to go it alone nowadays? Even mighty Maersk has seen the need to join forces with a global partner. There are still plenty of potential suitors for CMA CGM in Asia, Europe and elsewhere. Indeed, given the speed at which alliances are signed – and broken – in today’s shipping world, maybe they will have found one by the time this appears in print. Whatever alliances are signed, though, the participants have to be mindful of the need not to overdo things. Any attempt to wrest a majority share of any one trade will incur the displeasure of the regulators.
Merger talk is also, literally, in the air. Abu Dhabi-based Etihad has formally revealed the industry’s worst-kept secret, namely that it plans to take a 49% share in struggling Italian state carrier, Alitalia. Other airlines in Europe are unhappy at the idea; even before the deal was formally announced, half a dozen of them, including Lufthansa, KLM-Air France and Swiss International wrote to the European Commission on 17 June complaining that competition rules were being ignored. There are also concerns about foreign interests acquiring shares of strategic interests like airlines. What, though, is the alternative? A major state bail-out by the Italian government, even assuming it could afford it, would also breach EU rules. The other option is equally unpalatable – letting one of the oldest names in aviation history disappear.
If the newspapers are to be believed, the UK has come quite close to suffering a terrorist incident at one of its ports. It’s a concern that has been uppermost in security experts’ minds for many years, ever since the ‘9 11’ attacks in the US 14 years ago. Given that most British ports are remote from major urban areas and the fact that few of them handle large number of passengers, the casualties from an Al Quaida cell managing to ram a blazing oil tanker into a harbour are more economic than human, but that is not to say that they wouldn’t be serious enough. The closure of a major container port would ripple all through the economy, to say nothing of the environmental damage. If nothing else, the reports are a reminder of the need to take freight security seriously. Governments in all parts of the world already do, of course, but they don’t always have a good grasp of the nature of the problem or the difficulties the industry will have in complying with demands to screen or track literally millions of consignments. Two attempts in the US to provide universal screening of incoming air and sea freight have already ended up in serious trouble.
Is the shine coming off the online shopping revolution? Trade unionists from around the world got together in early July to fight what they describe as Amazon’s “mistreatment” of its workforce and its alleged anti-union stance. The UNI Global Union head of commerce, Alke Boessiger, complains that workers are “treated as robots and precarious work is the norm”. The union has now vowed to stop Amazon replicating its French and German business practices in eastern Europe. Head of UNI post and logistics, Stephen DeMatteo argues that companies such as DHL and Amazon “have a major role to play in setting responsible and sustainable standards in delivery and logistics.” I think we have all been guilty of a little naivety. The Internet has cut some supply
FBJ is the only UK and one of the few pan-European Multimodal newspapers. The comments we have received prove there is still room for a hard copy publication with the freighting industry. You don’t have to look at a screen all day!
FBJ boasts the most informative and authoritative source of information with unrivalled in-depth knowledge of the rapidly changing freight business environment.
As the definitive publication within the sea, air, road and rail freight sectors, each issue includes regular news and analysis, in-depth coverage discovering the business decisions behind the news stories, shipper and exporter reports, opinion, geographical features, political and environmental issues.
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chain costs, especially those related to paperwork and general bureaucracy and it should, in theory, make deliveries more efficient. In some respects it is a miracle-maker, but it can’t alter the laws of physics, or spatial geography. And despite diesel costs, rental rates, international freight rates and all other supply chain costs being on the increase, many online delivery companies quote ‘free’ or infeasibly low flat rate delivery charges. A rule of thumb used to be that the minimum costs of a single parcel ‘drop’ was £5, and then only in dense urban areas with a lot of customers in a small area, not home deliveries of large items in scattered rural or suburban areas. Someone, somewhere is being squeezed, and that most likely is the workforce.
Are container ships set to get bigger yet? Before the market has yet had the chance to fully digest the implications of 18,000teu vessels, some experts are already pointing out that there are no overwhelming technical barriers to 24,000teu monsters, as a recent conference in London was told. Technically possible, yes, but there would be profound implications for land logistics systems, not to mention that yet another jump in container ship size would have profound implications for the market. For a start, some ports might have to finally drop out of the race to attract main line vessels and accept that their role would henceforth be to handle feeder vessels and some of the lesser trades. That could well include some UK ports. The ability of rail and road systems to disperse an even greater volume containers thrust onto them by even larger vessels must also seriously be questioned. It might mean containers having to hang around in port for longer before continuing their onward journey – and it’s by no means certain that all ports have the land banks available to allow them to do this. Just because something can be done does not necessarily mean that it should be.
Barring an unexpected legal intervention, Eurotunnel’s MyFerryLink Dover- Calais operation will be expelled from the Channel by early next year, following the UK’s Competition and Markets Authority. According to the CMA, owning its own ferry company was in danger of giving Eurotunnel too dominant a share of the cross-Channel market and could lead to other, competing operators being forced off the route, which would further reinforce Eurotunnel’s position. What will happen next? Ships on this route tend to be tailor-made, so deploying them on another route might not be an option. Could another, independent operator step in and compete with the Shuttles and the established ferry lines between Dover and Calais? In theory, yes, but they would need deep pockets as cross-Channel ferry services are not especially profitable at the moment.
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