The coming year may be exceptional for Malta Freeport as business is expected to boom in the already successful shipping operation, which flourished from its early days way back in the early 1990s.  

Sources close to the shipping industry revealed with this newspaper that following the setting up of a consortium among three of the largest container lines in the world: CMA CGM, Maersk Line and Mediterranean Shipping Company, business passing through the Mediterranean transhipment hub will increase since CMA CGM has 50% shareholding in Malta Freeport. The Freeport employs some 1,200 people and ranks twelfth among the top European ports and is the third transhipment and logistics centre in the Mediterranean region.

The Danish, Swiss and French carriers, now dubbed as P3, plan to start operations in the second quarter of 2014, subject to obtaining regulatory approval.

Over the next few weeks, news is expected on the proposed P3 Network as regulators in the US, Europe and China decide whether the massive vessel-sharing agreement among the world’s three largest container shipping companies is anti-competitive and therefore whether it should be allowed to take effect or not.

Europe may be the toughest to convince, however container lines have for years shared vessel space as part of single or multiple trade lane agreements, involving two to six carriers. The agreements allow them to offer more sailings from more ports than they could by using their own ships exclusively.

Analysts meanwhile expect plans to go through even though the scale of the agreement is unprecedented in liner shipping, because P3 ultimately is no different from any of the dozens of vessel-sharing agreements in effect today around the world.

Maersk will contribute approximately 42% of the capacity of the alliance, around 1.1 million 20-foot equivalent units (TEUs), including its giant 18,000-TEU Triple E ships. MSC will provide 900,000 TEUs, 34% of total capacity, and CMA CGM will contribute 24%, 600,000 TEUs.

The other side of the coin is the possibility that Malta Freeport is negatively affected if the alliance is hindered and business plans are shelved, yet this is not a concern for analysts. Another concern worth mentioning is the ‘heavy marketing’ exercise presently underway from competing ports which, like the Malta Freeport, have set their eyes on the lucrative new business deal to reroute the operation their way. But sources close to the Malta Freeport told this newspaper that ‘Malta is aggressively taking up this challenge and will do everything imaginable to retain the business while targeting growth’.

The P3 consortium took the container shipping industry by surprise when plans to form a long-term alliance on the major east-west trades were announced in June.

The P3 will reduce costs for the three carriers. The alliance will deploy 255 ships, down from 346 vessels that Maersk, CMA CGM and MSC currently operate, on future P3 routes, yet there will be no reduction in capacity. The average size of the ships will be larger, and operating costs consequently lower. It has a total capacity of 2.6 million 20-foot-equivalent units on 29 service loops on Asia-Europe, trans-Pacific and trans-Atlantic routes. The network will be operated by a joint vessel operating centre, but the three lines will continue to have fully independent sales, marketing and customer service functions.

Declining volume growth and overcapacity in recent years have underlined the need to improve operations and efficiency in the industry. This month, CMA CGM reported its operating profit dropped by over half in the third quarter this year, compared with the same period last year, as a double-digit decline in average freight rates outweighed the impact of record cargo volume.

In a statement, CMA CGM said that during the period, consolidated revenue amounted to $4.1 billion, up 1.4% over the second quarter and down 2.1% year-on-year. Volumes carried rose by 11% year-on-year to three million 20-foot equivalent units (TEUs), a new historical record for the group. The average revenue per TEU declined by 11.8% year on year, when Asia-Northern Europe market rates contracted by more than 45% over the quarter.

CMA CGM, the third-largest shipping line in the world, was awarded a 30-year concession to operate and develop Malta Freeport Terminals in October 2004. In February 2008, the government granted it an extension of the concession for Malta Freeport Terminals from 30 years to a total of 65 years and in November 2011, CMA-CGM transferred half of its shares in Malta Freeport Terminals to the Yildirim Group of Turkey.

Malta Freeport focuses on the ‘hub' concept, under which cargo is discharged from large mother vessels and relayed to a network of regional ports by regular and frequent feeder vessels. Around 95% of Malta Freeport's container traffic is transhipment business. The logistic concept offers various benefits for Malta Freeport's clients, including fewer mainline port calls, reduced voyage times through minimal diversions and shorter transit times, thus enabling them to concentrate on profitable voyage legs.

Last year, Malta Freeport Terminals handled 2.54 million TEUs. As one of the Mediterranean’s key transhipment ports Malta Freeport represents a strategic platform for the shipping lines that have chosen it as their Mediterranean hub port, being located at the crossroads of some of the world’s greatest shipping routes and in the heart of the Europe, Maghreb and Middle East triangle.