News / Angry shippers accuse carriers of 'price-signalling' with 'unjustified' surcharges

© Roman Romaniuk

The European Shippers Council (ESC) has accused container lines of price-signalling, following a wave of emergency bunker surcharges (EBSs).

A letter to the European Commission claims the introduction of an EBS by “most of the largest” container lines at the start of June was “unjustified”.

“Oil prices had indeed been rising during the last month, but the latest hike cannot be assimilated to an emergency,” says the letter.

“Oil price fluctuations, up or down, had been frequently happening in the past years and no negative surcharge was applied when the barrel of oil went down to $40 some time ago.”

Surcharges, it adds, were reserved for events that could not be seen and affected the “availability”, rather than the price, of oil.

In such a situation, the ESC said it would be “unreasonable” to expect carriers to bear the impact of associated fuel before going on to further slam the timing of EBS announcements.

“The fact [that] liners, which announced they would apply such a surcharge, have been doing it almost simultaneously is, from ESC’s point of view, tantamount to price signalling,” it added. “And therefore, is in contradiction with the spirit of the ‘GRI commitment’ which liners agreed upon with the European Commission two years ago.”

In 2016, 14 carriers committed to increase price transparency and reduce coordinating prices by ceasing to publish general rate increases (GRI).

The EC gave the commitment legal force on 7 July 2016, and the ESC is now “urging” the commission to assess whether its principles have been breached.

But it is not the first shipping association to slam the imposition of an EBS. Chris Welsh, director general of the Global Shippers Forum, has suggested the move was “an unwelcome legacy of the cartel era”.

However, chief executive of SeaIntelligence Consulting Lars Jensen defended the carriers in a LinkedIn post, claiming they are under “severe financial pressures”.

He also wrote: “In plain words, [the ESC is] accusing carriers of illegal collusion, but let’s take a look at reality for a moment. The EBS can be criticised for being illogical, and the roll-out perhaps not the prettiest piece of marketing from the carriers, but that is of course neither signalling nor collusion in itself.”

Mr Jensen suggested carriers were hamstrung once one announced an EBS, left with three options: abstain from applying an EBS, impose one or abstain from announcing an increase.

Looking at the ESC’s complaint, Mr Jensen said there was only one “logical conclusion” that can be taken from it: “That would be that it should not be allowed for carriers to be open and transparent about their pricing and pricing changes.

“In that case they cannot be accused of signalling. But is that really what the shippers want? A market where we eliminate all notions of pricing transparency?”