On April 9th, 2014, Rodolphe Saadé, Executive Officer of the CMA CGM Group, inaugurated the Global Shipping Liner conference 2014 in Hamburg. During his presentation, he focused on the P3 shipping alliance, a new model for the shipping industry.
Following this conference, Janet Porter, Editor-in-Chief containers at Lloyd’s List Group, interviewed Rodolphe Saadé. You will find hereafter the article written shortly after the interview by Janet Porter.
LLoyd’s List – 2014 04 09 – P3 gears up for July start as the carriers wait for China’s approval
Temporary offices have been rented in London by the P3 alliance as member lines prepare to start joint fleet operations in three months’ time.
The trio is still waiting for approval from the Chinese authorities, which apparently continue to regard the network centre that will be responsible for ship planning as a merger rather than a vessel-sharing agreement.
Nevertheless, the world’s top three carriers are starting to make firm plans for the co-operative agreement in the hope that clearance will be granted in time for operations to start before the beginning of the 2014 peak season.
Offices have been leased in London until the end of the year, CMA CGM executive officer Rodolphe Saadé told Lloyd’s List.
P3 also plans to have an office in Singapore.
The Federal Maritime Commission has already approved P3, while members are hopeful that the European Commission will signal that is satisfied with assurances given by mid-May.
Consortia members have to self-assess in Europe, but may still receive some guidance from Brussels on whether what is planned is acceptable.
CMA CGM, along with Maersk and Mediterranean Shipping Co, announced plans to operate a joint fleet in the mature east-west trades last year.
Since then, other alliances have strengthened their partnerships, with Mr Saadé seeing consortia as the way forward for the foreseeable future.
Giving the keynote speech at the Lloyd’s List-Containerisation International Global Liner conference in Hamburg, Mr Saadé said a new business model was needed for the container shipping industry to remain profitable.
Observing that the top three lines in the world are not only European but also family-owned, Mr Saadé said that ownership structure was absolutely critical, with in-house expertise built up over the decades that cannot be replicated in more conventional corporate structures or state-controlled entities.
The son of CMA CGM founder Jacques Saadé told the conference that the line had also identified a strategy based on several core principles including the use of investment as a cost-reduction lever in growing trades, alliances in mature trades and the development of commercial differentiation within those alliances.
But Mr Saadé stressed that P3 was only an operational alliance between the three, with each competing on price, service and intermodal networks, operating separate feeder networks and negotiating terminal contracts separately.
CMA CGM recently upgraded six ships on order from 16,000 teu to 17,700 teu to be compatible with Maersk and MSC tonnage.
Three of the CMA CGM ships are being built in Shanghai and Mr Saadé, speaking to an audience for whom the KG model has lost credibility, said China was able to offer financing packages that are not available anywhere else.
He also said Chinese yards had shown more flexibility than the South Koreans during the recent crisis when lines struggled to cancel or delay newbuilding orders as losses mounted, and had proved easier to work with.
Looking ahead, the P3 Network would create a new operational landscape for the industry, said Mr Saadé.
But the P3 services will only represent 41% of CMA CGM’s volumes, with the line continuing to develop and expand in north-south and regional trades.
Mr Saadé also said that, despite the takeover talks between Hapag-Lloyd and CSAV, he does not see much scope for further consolidation of that type in the industry.
This article has been reprinted with permission by Containerisation International and Lloyd’s List, part of the Informa Group.
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