End of CBER by EC ‘may backfire on shippers’, warns analyst, states a loadstar news article.
Consortia Block Exemption Regulation (CBER) renewal
The EC’s decision not to renew the Consortia Block Exemption Regulation (CBER) after more than a decade covering box shipping in Europe has reopened the debate over what benefits shippers accrue from vessel sharing agreements.
Announced yesterday, the decision will take effect when the shipping alliance exemption expires on 25 April next year and, while shippers said it was “welcome news”, analysts have remained circumspect.
Senior manager of supply chain research at Drewry, Simon Heaney, warned on LinkedIn that the decision may “backfire” on shippers.
He said: “Firstly, there was no compelling case that carriers abused market power during the pandemic. Such was the extraordinary impact of Covid on supply chains that freight rates would have soared with or without the CBER.
“Secondly, the hoped-for increase in competition will be stymied by legal uncertainty and extra bureaucracy.”
Scrapping the CBER
Indeed, the commission itself said scrapping the CBER would not amount to a prohibition of cooperation between carriers, which was still possible if compliant with general competition rules, per the Horizontal Block Exemption and Specialisation Block Exemption Regulations.
But Mr Heaney suggested carriers may be put off from that as they may “expose themselves to potential legal action” .
He added: “By effectively coercing lines to operate independently, the logical conclusion is each carrier will have to downsize service portfolios in terms of frequency and connectivity. That would reduce, not increase, competition on a port-pair basis and push up freight rates.”
Drewry MD and head of supply chain advisors practice Philip Damas put it more bluntly, claiming it “will result in worse service for shippers and less competition”.
And The Loadstar’s Mike Wackett agreed that scrapping the scheme – particularly if other jurisdictions follow suit – could be detrimental for shippers, and said he would not be surprised to see it result in the acceleration of the 2M divorce.
He added: “It could also see other alliance lines considering standalone service options, and result in more M&A activity and consolidation.”
However, Alphaliner noted that “abolition is expected to have little impact on the industry given the modest number of consortia still in operation”, and explained that the major alliances, the 2M, ONE and THE Alliance had all separately sought EU antitrust clearance.
It claimed instead that the Southern Africa Europe Container Service as one of just a handful of vessel sharing agreements benefiting from CBER.
“CBER’s abolition might have been politically necessary, given its opposition by many forwarders and port operators increasingly competing with the large, integrated carriers,” Alphaliner wrote in its weekly newsletter.
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Source: Loadstar
Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point. You obviously know what youre talking about, why throw away your intelligence on just posting videos to your site when you could be giving us something informative to read?