Wednesday, 15 November 2006 05:30
New shipper forum strongly supports EC’s decision to outlaw liner conferences
The Asian Shippers’ Council (ASC) fully concurs with the European Commission (EC) over its assessment of the latest European Liner Affairs Association (ELAA) proposal to replace the conference with a system of information exchange.
The EC has turned down ELAA’s proposal to replace the conference with an industry organisation for pro-competitive information exchange on the grounds it would annihilate “the pro-competitive impact of abolishing the block exemption”.
In a submission to the EC Directorate General for Competition, the Global Shippers’ Forum (GSF), of which ASC is a main component, detailed its objection to ELAA’s proposals on capacity forecast and benchmarking of currency fluctuations, strongly supporting the EC’s assessment against ELAA’s proposals. In it the GSF noted, “These could be used to perpetuate the existing collusive behaviour and practices embodied in the liner shipping conferences and discussions agreements.”
In particular the GSF has grave concerns over ELAA’s proposal for the production, discussion and publication of liner capacity forecasts. Such joint analysis is a feature of the present conference system, enabling conferences and discussion agreements to tacitly agree on and influence the vessel deployment on the various trade routes and liner freight rates.
"It is precisely because of such blatant co-ordination today within liner conferences and Discussion Agreements that GSF supports the repeal of the block exemption that would remove such practice from the liner shipping sector.
"Any acceptance of the ELAA proposal for supply forecasting would therefore be considered by GSF to be a retrograde step in the removal of anti-competitive practices in the liner shipping market."
As for the benchmarking of currency fluctuations, the GSF believes that it offers a means by which carriers could signal to each other as to the level of surcharge each carrier should be implementing, much as they are able to under the present conference system.
By repealing block exemption from antitrust immunity for liner shipping, effective October 2008, the EC is ushering in a new environment for liner shipping. It will align liner shipping with most other industrial and service sectors by bringing to an end to the system that permits collusion amongst industry members to establish freight tariffs and surcharges, a privilege they have enjoyed for about 100 years.
It is our hope that shipping lines will recognise this new reality by embracing competition and free market principles, and strive to work with shippers in a mutually beneficial partnership based on collaboration and shared interests.
We further hope that Asian governments will seize this opportunity to review existing legislation which serves to protect the liner industry from competition.
Background:The GSF was launched on 29 September 2006 at Antwerp, Belgium, to provide a platform for shipper organisations from across the world to share their views on issues of topical importance, deliberate on them, and then communicate their positions and policies to both governments and decision makers.
It was formerly known as the Tripartite Shippers’ Group (TSG), a formidable grouping formed in 1994 bringing together shippers’ councils of Europe, Japan and North America. The ASC, the pan Asian shippers’ council formed in September 2004, was included as the Asian component of the TSG at its 12th annual meeting in San Francisco in September 2005.
The new name more accurately reflects the group’s present composition. Originally comprised of organisations from three major trade regions of the world, the GSF today includes the whole of Asia’s shipper councils whose focus centres on policies and industry practices that impact the movement of international commerce.
