TPM 24: To hub-and-spoke, or not to hub-and-spoke? That is the question
The question of rates and annual contracts – and the effects of the Red Sea ...
The Global Shippers Forum (GSF) has renewed lobbying the European Commission’s competition directorate to take a closer look at the liner shipping industry.
A year ago, almost to the day, the EC granted container lines another four years of exemption from its cartel competition laws under the Block Exemption Regulation (BER), under which container lines are allowed to share operational data and form shipping alliances.
The GSF said the enormous rise in freight rates, coupled with all the other container supply chain issues, forced regulators from China, the US and South Korea to renew scrutiny of the sector, while “the EU has remained silent, yet four of the biggest shipping lines in the world fall within its jurisdiction”.
GSF chairman James Hookham added: “Shippers feel sidelined by the granting of block exemptions and other anti-trust protections.
“Their rights to a fair and open market have effectively been rejected in favour of greater supply-side efficiency and relief from the costs and ‘hassle’ of checking compliance with normal competition rules.
“It is not unreasonable to expect that these exceptional privileges are kept under close review, especially during times of unprecedented market turbulence.”
But, he said: “The commission has adopted a ‘legislate and forget’ approach and, seemingly, abandoned shippers and other users of shipping services, such as freight forwarders and port operators, to the fate of a deliberately distorted market.
“Given the dependence of European trade on global container shipping services, this ‘supervisory deficit’ needs to be corrected.”
The GSF has put forward a three-pronged “Data-Triggers-Meetings” matrix it would like the EC adopt, and which it claims would align European regulators with their counterparts in the US Federal Maritime Commission and China’s Ministry of Commerce.
The matrix comprises: equipping itself with sufficient market data to be able to monitor the behaviour of the market; establishing performance thresholds that cover key service parameters, such as capacity, rates and reliability, and which will trigger further investigations if they are breached; and launch more frequent consultations with the industry’s stakeholders and representatives to understand the factors and experiences of ‘consumers’ of shipping line services, given its decision to abjure their rights to the protections otherwise enshrined in the EU treaties, similar to the FMC’s fact-finding missions.
Mr Hookham added: “As I speak, all those involved in world trade are waiting to see just how damaging the closure of the Suez Canal will become to schedules, service and shipping rates.
“With these additional factors yet to play out, it is vital that competition regulators engage closely with this market to monitor the consequences of the special privileges they have granted it.”
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