The European Commission has said it does not regard the huge container spot rate increases between Asia and Europe as sufficient justification to investigate carriers for an infringement of the Block Exemption Regulation (BER) for consortia, says an article published in the loadstar.
What is happening
The European Shippers’ Council (ESC) and European freight forwarder association CLECAT had presented the EC with data relating to the increase in blank sailings, a decrease in reliability “and especially the outrageous price hikes that most customers had to accept in order to have goods loaded”.
They said the massive rate increases were putting many small companies “in a situation of losing money and businesses”.
ESC Comments
The ESC said: “The commission responded to be fully aware of the present market situation, including recent price hikes, which, from their point of view, were mainly due to the wane and surge on the demand side as a consequence of the Covid-19 crisis.”
The competition commission maintained that there were only two circumstances where the EC had the right to start an examination: when a formal review of the BER is relaunched (in three years’ time); or “in the context of a legal complaint”.
Ministry of Commerce
However, it did acknowledge that the global situation at least warranted “a renewal of the discussions with the maritime competition authorities in other parts of the world” – the last meeting with the US FMC and China’s Ministry of Commerce having taken place in 2019.
Dialogue between all the stakeholders
Moreover, the commission told the ESC and CLECAT it would establish a dialogue between all the stakeholders with a view to “finding a common approach to the current market problems and setting up an action plan”.
As a result of their online meeting with the EC, the two organisations said they would now “consider whether there is a case for filing an official complaint to the EC”.
Disappointing news for European shippers
The EC decision will be extremely disappointing news for European shippers that have seen container rates from Asia more than quadruple in the past four months, and they will now have to rely on the intervention of Chinese regulators for any respite from skyrocketing freight rates.
Spot rate increases
The Chinese authorities last acted in September, when they requested carriers on the transpacific should reinstate their suspended sailings and put a lid on spot rate increases.
Since the intervention, spot rates from Asia to the US west coast have held at around $4,400 per 40ft, while rates from Asia to North Europe have exploded from about $2,000 per 40ft to $8,800 as of last week – with many shippers paying considerably more after the addition of premium equipment and space guarantee fees.
Warning for carriers
ESC and CLECAT have warned carriers that they should “not abuse” the privileges of the Consortia BER “as it seems to be the case today”.
The EC renewed the BER, which allows container shipping lines to coordinate their networks and utilise space on their vessels, last April for a further four years, saying that the conditions allowing the anti-trust exemption “largely remained unchanged”.
Consortia agreement
It claimed the consortia agreement was justified, because “consortia generally bring rationalisation and economies of scale which help to improve the productivity and quality of available liner shipping services while benefiting the users.”
“In that context, those efficiencies result in lower prices and better quality of service for consumers,” said the commission.
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Source : THE LOADSTAR
