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Maersk Awaits China's Decision on Proposed Alliance

Maersk Line, the container-shipping unit of Danish conglomerate A.P. Møller-Maersk, expects the Chinese government to decide in June on the company's application for a shipping alliance with two other shipping operators, in a bid to reduce operating costs amid weak international trade.

Maersk Line's plan to set up an alliance with its rivals CMA-CGM of France and Mediterranean Shipping Co. of Switzerland won clearance in March from U.S. regulators. However, the proposed P3 Alliance is still awaiting approval from Chinese and European regulators before it begins operation in the fall, slightly lagging behind its second-quarter launch target.

Once approved, the alliance would gain control of an estimated 43 percent of the Asia-to-Europe container-shipping market, 41 percent of the trans-Atlantic market and about 24 percent of the trans-Pacific market, according to analysts' estimates.

Beyond lengthy approval processes, the delayed launch could avoid disruption to the proposed alliance members' operations during the peak August-to-September shipping season, said Tim Smith, Maersk Line's chief executive for North Asia.

Like code sharing between airlines, the proposed P3 alliance would allow the world's top three container-shipping operators to cut costs by enabling shared ships and port facilities. It also will play on each shipping company's geographic strengths to move cargo faster and more cheaply. Analysts expect that the alliance's efficiencies would help Maersk Line cut its costs by $1bn annually.

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