CSA President's Message – New alliances can help region – but we must be vigilant

The P3 Network Vessel Sharing Agreement between Maersk, CMA CGM and Mediterranean Shipping Company was approved by the US Federal Maritime Commission (FMC) on 20 March.

This agreement, which took effect on 24 March, authorises the parties to share vessels and act in a cooperative way in the trades between the USA and Asia, northern Europe and the Mediterranean.

According to the Journal of Commerce, the P3 Alliance will control 42 per cent of Asia-Europe capacity; 24 per cent of transpacific capacity and 42 per cent of transatlantic capacity.

Alliances are nothing new and most of the top 20 shipping lines are in some form of alliance. In fact, the G6 alliance, which includes Hapag-Lloyd, NYK, APL, MOL, Hyundai and OOCL, recently announced an expansion of its coverage of the transatlantic and Asia Pacific west coast trade lanes – perhaps a reference point for the potential benefits of alliances for consumers.

While we welcome any development that benefits the markets we serve, we in the Caribbean need to be vigilant and mindful of how the evolving alliances will affect trade in our region, both in terms of prices levied on the markets we serve and how it affects the business of our ports.

Dedicated

Maersk is to restore the SeaLand name in a new company dedicated to the intra-Americas market. SeaLand will have local sales and support personnel in North, Central and South America as well as in the Caribbean. It will be interesting to see how this affects the business of Caribbean-focused carriers and what impact the competition will have on shippers to and from the region.

While we focus on the changes in the global shipping landscape, it is equally important to keep an eye on the development of the regional economy, because our ports have much better competitive prospects if we can expand regional economies and stimulate trade within the Caribbean.

So it is pleasing to hear that both the Inter-American Development Bank (IADB) and the IMF are forecasting growth of three per cent in 2014 for Latin America and the Caribbean. The IADB also projects growth of 3.3 per cent in 2015. Both organisations pin this growth on improving economic conditions in the USA and Europe.

Overall, the outlook is better than it has been recently for most Caribbean and Central American economies following the recession of 2008. Such growth, if it can be sustained, will undoubtedly have a positive effect on the economies of the nations of the Caribbean and Central America and, by extension, the region’s ports.

Agreement

Another positive development is the announcement that the Panama Canal operators and the consortium involved in the expansion project have reached agreement for the work to resume. It is in the interest of all Caribbean and Central American port states that Panama should complete the work as close to the original schedule as possible. It is clear is that the diversion of US East and Gulf Coast cargo to the Suez Canal and other competing routes will take away potential benefits from all ports in this region.

By the time you receive this volume of Caribbean Maritime we will be enjoying the hospitality of the Miami members of our Association at the 13th Caribbean Shipping Executives’ Conference of the CSA, at the Miami Marriott, Biscayne Bay.

I look forward to seeing you at the conference. If you are not yet a member of the CSA, I hope you will visit us in the future at one of our conferences and events.

Grantley Stephenson
President, Caribbean Shipping Association