[280212.EN.SEA] ESC Calls For Removal Of Anti-Trust Block Exemptions For Shipping Lines

THE European Shippers' Council, reiterating its standing plea, is again demanding the scrapping of anti-trust block exemptions around the world for shipping lines.

The renewed call follows the release of a US Federal Maritime Commission report on the impact that the EU repeal of the block exemption in 2008 and its effect on US shippers trading with Europe.

Said the ESC statement: "The impression gained by reading this document is that maintaining the status quo in the US regulatory field would be the best option."

Others take a different view, saying the FMC report sets stage for further regulation because it concludes that the EU ban on rate-setting shipping conferences did no harm. As it stands, conference-like "discussion agreements" or "stablisation agreements" exist on the transpacific trade in which member lines "recommend rate" increases to themselves.

The ESC said the US report failed to "recognise the greater transparency and potential negotiability which now exists of fuel surcharges (BAF) and Terminal Handling Charges (THC) following the regulatory repeal".

Commenting on the recent spate of rate hikes, Jean-Louis Cambon, chairman of the ESC's Maritime Transport Council, said: "Notwithstanding the self-inflicted dire situation in which the carriers find themselves, it is very remarkable that the date of March 1 be so often adopted by most of them with a largely similar quantum of increase. It is all the more peculiar that, very rarely in the past has a GRI been successful at such a date, so shortly after Chinese New Year, and taking now into account the background of a depressed European economy.

"Is there a commendable logic in the behaviour that pushed a number of carriers to chase market share, often pricing below shippers' target levels, then having to ask for unreasonable increases in one go? The answer can only be negative. Going for market share always brings depressed revenue levels for largely unchanged market positions. It is called value destruction and is detrimental to both carriers and shippers."

The ESC statement said it will maintain a close watch on the larger carrier alliances to ensure there is no "infringement of normal business conduct. There are mechanisms for removing volatility, and one of the best is to enter into longer term contracts which removes the short-term unpredictability from the rates."

Said Mr Cambon: "Rather than staying with the status quo, as implied by the FMC's report, we should be focusing on the encouragement of more liberalisation with the removal of anti-trust block exemptions around the world, following Europe's lead."

Source : HKSG, 27.02.12.