[EN-SEA] ELAA Comments on European Trades Post-Liner Conferences

The abolition of the liner shipping Conferences in Europe couldn't have come at a worse time for the industry, says Chris Bourne, executive director of the European Liner Affairs Association (ELAA).

Speaking at the Global Shipping Summit in Dalian last week, Bourne outlined the challenges members face in the current poor trading environment, coincidental with the EU's abolition of liner shipping Conferences.

Bourne did make it clear that the regulatory move to abolish Conferences in Europe in October 2008 had not precipitated the current crisis in liner shipping; but the timing couldn't have been worse.

However, the uncertainty created by the end of the Conference system inevitably added to the destabilisation of the market, and the freefall of rates on the major Asia-Europe trade might not have been so severe if the Conference system had still been active in Europe.

According to recently published ELAA statistics, the rate of decline in trade has slowed in the third quarter westbound on the Asia-Europe trade (down by 14% in Q3 compared with 22% in Q2).

But rates are still down 40 - 45%, although export volumes from Europe have improved and, in some recent months, exceeded last year.

There have been other consequences of Conference abolition that Bourne suggests might well have confused the market at a time when, as volumes dropped dramatically, keener focus would have been more beneficial.

One such issue was the uncertainty over ancillary charges and bunker and currency surcharges. With lines having to introduce their own tariffs, shippers have had difficulty in getting clarity in comparing the various rates on offer.

The global regulatory situation remains in flux, and such uncertainty would clearly not be good for any industry.

While the European Commission in Brussels had hoped that the regulatory bodies around the world would follow its lead in banning Conferences, there is little sign of this happening.

"There is little prospect of a global competition law for the shipping industry in the near future," says Bourne.

"While we have learned that meaningful dialogue with regulators is useful through our experience in Europe, the lines still feel threatened by competition law that certainly lacks uniformity around the world. The lines operate globally but the regulators do not, as yet, have the same global perspective."

Source : EFT, 28.10.09