Delegates at the TOC Container Supply Chain event in Rotterdam heard that shipper opposition to deep sea liner shipping alliances may be dangerously misplaced, reports the Loadstar.
Prominent rise in freight rates
Lars Jensen, chief executive and partner of Sea Intelligence Consulting, said efforts by some to bar container lines from operating in alliances, claiming they have become anti-competitive, would result in freight rates “skyrocketing”.
The EU’s Block Exemption Regulation (BER), the de facto legislation covering liner alliances and vessel-sharing agreements (VSAs) on container trades to and from Europe, is set to expire on 25 April next year, and EC regulators are assessing whether to extend it for five years.
Cost compensation
Mr Jensen said: “If the anti-trust exemption isn’t extended, it doesn’t necessarily mean shipping lines can’t run alliances. It may well just mean the lines have higher hoops to jump through, and I believe that they will do that.”
He added that this will mean a lot of legal costs and the carriers will have to recoup those costs, which could be done only through higher rates.
“However, if shipping alliances are outlawed altogether, then freight rates will skyrocket, because alliances are the only way that carriers can operate ultra-large container vessels (ULCVs) effectively,” he said.
Limited port rotation under 2M alliance
He explained that, on its own, Maersk Line could only run two Asia-Europe services a week, and even then it would have a much more limited port rotation than under its 2M alliance with MSC.
“I think you would see these services calling at just three Chinese export ports and three main European port calls. And MSC is in the same situation.”
He also said,“Now, if you are shipping from Shanghai’s container yard to Rotterdam’s, then that’s fine, rates will stay relatively low. But for any other origin or destination you will have to use far more transhipment than currently, and shippers would be faced with an enormous jump in freight rates.”
Hr concluded with the opinion that shippers should hope that the lines are allowed to continue to operate alliances.
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Source: The Loadstar
