Fury at European barge congestion: 'a festering mass of pus, now bursting open'
Storms and shipping surcharges are heaping misery on cargo owners waiting for freight on Northern ...
© 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?”
Comment on this article
Gary Ferrulli
June 15, 2018 at 2:58 pmA couple of notes and comments. First, the price of fuel didn’t start to go up last month or a month ago – it started 18 months ago and in that time has climbed over 65%. So this is not a sudden event, but the filing of a surcharge came months after the prices started to climb, Second, while publishing whatever they did so late, the carriers have also created a long list of exemptions from the surcharge through contracts negotiated with specific shippers. Those using the spot market may be paying a good portion of what is charged, that’s the realities of the spot market.
On the question of calculations, etc, what is being suggested there is cost based pricing. Be careful what you ask for, shippers won’t like the results. The 6 consecutive years of industry losses should give some evidence of that.
Seems to me a 65+% increase in fuel qualifies for a surcharge. and reality that there is market place pricing, not cost based and having nothing to do with signaling.