China's rejection of a game changing container shipping alliance has deepened pessimism in an industry plagued by overcapacity, analysts say.
A tie-up between shipping giants Maersk, CMA CGM and Mediterranean Shipping to pool their vessels, dubbed the P3 Alliance, fell apart after China's Ministry of Commerce rejected the plan late Tuesday.
The proposal, announced nearly a year ago, aimed to save costs in an industry overwhelmed by a glut of supply and slowing demand. The announcement came as a surprise as the U.S. Federal Maritime Commission and the European Commission had not raised objections.
"The status quo in the container shipping industry is not working. We're in year six of a ten-year downturn for container shipping. The P3 alliance was an attempt to change the industry dynamic and longer-term investors will now look at this and say the industry has lost hope for any change," Jonathan Windham, head of Asia ex-Japan transport and infrastructure research at Barclays, told CNBC.