FMC Chairman: We will keep a close eye on 2M

Industry sources indicate that the US will not act to delay effectiveness of the 2M alliance by October 11. However, if so, 2M will be subject to extraordinary monitoring, FMC Chairman Mario Cordero tells ShippingWatch.

The 2M alliance between Maersk Line and MSC will be subject to extraordinary monitoring if the alliance is cleared by the US Federal Maritime Commission (FMC), Chairman Mario Cordero tells ShippingWatch a few days before he and his four colleagues of the FMC’s political commission will join to make the final decision on 2M.

The options are the following: The Commission could reject the alliance if a majority of the five commissioners believe that the collaboration is harmful to free competition. The alliance could be straight-up cleared. Or it could be cleared though subject to certain conditions. But according to industry sources, the US will not act to delay effectiveness of 2M by October 11.

Extraordinary monitoring

Mario Cordero declines to speculate about the outcome of the Commission´s action as well as he does not want to indicate what the memorandum on 2M already elaborated by the FMC-staff recommends. But in light of the fact that the FMC earlier this year cleared the more extensive P3 collaboration, which also included French CMA CGM, it would be very surprising if the FMC decides to block the less ambitious 2M alliance.

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But the 2M alliance - between the two largest container carriers in the world – is still so extensive that it will be subject to extraordinary monitoring if cleared by the FMC, says Cordero.

Smaller than P3

"It is not yet clear if any other questions will be raised before a green lighting of the alliance. But as the process stands right now, the agreement would be effective from October 11. In that case, however, I do expect that a monitoring program will be set up. It is not business as usual when we do that but only a measure we implement to address the magnitude of the collaboration.  P3 was also subject to a rigorous monitoring program,” Mario Cordero tells ShippingWatch.

Maersk Line confirms 2M launch in January 

When P3 was acted on by the FMC, four of the Commission’s five members voted in favor, with one member voting against. The decision is reached by simple majority. However, P3 was never realized, as the Chinese authorities rejected the alliance ahead of the summer holiday season. Only a few days later, Maersk Line and MSC resumed contacts and subsequently established 2M. Unlike P3, 2M does not operate with an independent network organization – a factor that supposedly spurred China to reject the alliance.

Economies of scale

Several media have reported that one of the Commission’s members has asked the FMC to consult with the Chinese authorities as part of treating the application in the US. But Mario Cordero says that, “to his understanding no commissioner has suggested that China should be consulted in the process and that the Commission’s consideration is conducted solely under the provisions of the U.S. Shipping Act.”

In an interview with ShippingWatch prior to the FMC’s decision to clear P3 in the spring of 2014, Mario Cordero pointed to the consolidation trends currently taking place in the container industry – trends that he highlights again this time.

"Our industry is moving towards collaboration of scale,” says Cordero who often has urged American ports to lift efficiency.

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