- Discussions are underway between the Competition and Markets Authority (CMA) and international maritime bodies over the increasing costs of international shipping.
- The CMA said it is aware of concerns of collusion and price fixing, an allegation it is “taking seriously”.
- It is now undertaking discussions with international competition, market and maritime authorities to explore what other states are experiencing and any investigations/actions they might be taking.
A recent news article published in the Lets Recycle states that rising shipping costs spark competition concerns.
A letter to the CMA
This comes after the British Chamber of Commerce (BCC) sent a letter to the CMA yesterday, 9 August, asking it to initiate a formal investigation into the operation of the international shipping and sea freight container hire market.
Feeling
Simon Ellin, chief executive of the Recycling Association, said he welcomes the letter sent by the BCC, and says the industry has had concerns over the shipping market for a while.
“There is a general feeling in the industry that there is almost a monopoly in the shipping market which means it is very difficult to get a fair price. There has always been a suspicion that the consolidating shipping market will lead to higher costs and this has turned out to be the case.
“As well as this, there have been other global factors at play which has made things harder. We had the Suez Canal blockage and log-jams at ports in South China due to Covid outbreaks which can cause supply issues for exporters. So, while there are other factors at play, it is hard to argue that world shipping is not dominated by few companies and a feeling companies can charge whatever they like, so I’m glad this letter has been sent and look forward to the next steps”.
He added that the issue of shipping costs is just “one part of a bad cocktail” the industry is facing. He said driver shortages, increased paperwork and costs from Brexit and a lack of available workers had meant costs have risen by around a third this year.
Dr Ellin said this may be haven “masked by an increase in commodity prices for paper and plastic”, and warned that any change could be troubling for the industry.
We believe the time is right for the CMA to launch a full investigation into this market’s impact on UK businesses
– British Chamber of Commerce
Letter
The BCC’s letter explained that over the past year “and particularly in relation to the last few months”, companies using sea freight and containers to bring in goods have faced “enormous rises in prices”.
The letter added they have also seen inconsistent availability of containers from the Asia-Pacific region bound for the UK.
The BCC said its quarterly economic survey for April-June 2021 found member companies facing a “seven-fold increase in container hire costs from China compared with previous market conditions a year or so ago”.
The letter read: ” There is little sign of any imminent market correction leading to structural problems with the market in sea freight from Asia-Pacific in our view. The European Central Bank and the Organisation for Economic Co-operation and Development believe the market may however be behaving more cyclically,”
It concluded by saying that given the continuing nature of the disruption, the BCC feels “the time is right for the CMA to launch a full investigation into this market’s impact on UK businesses”.
The BCC wants the competitions body to review both the quantitative and qualitative evidence outlining the disruption shipping costs and availability are having for UK businesses.
We are aware of increases in the cost of international shipping and have received reports of market issues and allegations of collusion and price fixing – all of which we are taking seriously
– Competition and Markets Authority
Allegations
In response to the letter, a CMA spokesperson said it is aware of the allegations and welcomes any evidence provided.
The full quote from the spokesperson said: “We are aware of increases in the cost of international shipping and have received reports of market issues and allegations of collusion and price fixing – all of which we are taking seriously. As such, we welcome additional information and evidence of any alleged breach of competition law.”
“We are currently developing our understanding of this issue through discussions with international counterparts in order to inform a decision on whether any further action would be appropriate.”
Recycling
Recyclers who export paper for recycling have been complaining of rising shipping costs for a number of months, which has escalated in recent months.
The costs have contributed to general difficulties in the logistics sector, from shortages of drivers and trucks through to non-availability of containers and blank sailings.
Textile recyclers have also been hit by shipping costs and tightening export markets since the pandemic begun, with some saying the cost of shipping to African countries has increased by nearly four times.
They say there has also been a resistance by end customers to pay more, and alongside currency issues means margins are shrinking.
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Source: Lets Recycle
