Asia confident of liner-block move

By Chew Wai Yee


With the successful European repeal of liner-block exemption from its anti-trust law, Asian shippers are confident that this part of the world will follow suit, but in less than the 20 years it has taken the European Union to bring about reform.


“We’re very confident that the reform in Asia will take off. America already has a system in place and Europe will outlaw all conferences next year.


“We’re the last in the link,” said Asian Shippers’ Council chairman John Lu, at the closing of the Global Shippers’ Forum 14th annual meeting held in Singapore today. A major priority identified by the Global Shippers’ Forum in its three-day meeting was to call on Asian countries to undertake a major overhaul of their laws and regulations, which should outlaw anti-competitive practices by liner conferences and discussion agreements.



The GSF held the view that most Asian countries have adopted a spectator role, watching the statutory and regulatory advancements made in both Europe and North America.


These reforms began with the Ocean Shipping Reform Act in the US, followed most recently in Europe with steps to abolish the liner-block exemption, which will take full effect from October 2008.


“The GSF believes that the time for watching and waiting in Asia is now drawing to a close. There is now strong evidence demonstrating the benefits of competitive reforms.


“It is time for all Asian countries to examine their own laws and regulations, in order to bring about market-based principles designed to increase competition,” the GSF said in a statement. Moving forward, Mr Lu said that shippers in Asia, based on common interests and motivated by the European success, are going to move collectively to influence the regulatory decision-makers to abolish the monopolistic cartel system with all its unfair treatments.


But having said that, Mr Lu recognised that Asia is a diverse region of differing maturity, political systems and economic situations, and the whole movement would progress in stages.


The group of countries in Asia that Mr Lu expects to move in the direction of reform first will be the liner service buyers, such as China, which does not want to suffer under the mercy of liners and, more importantly, see freight dollars moving out of the country.



To that end, China passed an anti-trust act about a month ago and India, which already had such a law in place since 2002, will see it implemented next year.


The second group, he says, will be facilitators like Singapore and Hong Kong, which do not want to be too involved in the debate but would like to see the liner exemption repealed as it encourages free trade.


The third and last category to move will be the liner service exporting country, such as Japan.


“This category will be a bit more difficult,” says Mr Lu. “Japan will not want to let go of the maritime exemption. Why should it? The liners get money substantially into the country.”



While Japan is characterised as being in a “unique trade position”, and the Japan Shippers’ Council representative himself described the Japan-China trade as “liberalised” and “free” without the existence of any conference systems, this is not the view of shippers.



“There are about 30 lines operating in that trade but they move with one rate and one surcharge,” said Andrew Traill, managing director and freight transport specialist with The Shippers Voice.


“There obviously is some cartel arrangement in there, but it’s not official. This will not happen in Europe or anywhere else in the world.”


“The situation in Japan is such that the Japanese companies are so close with the shipping lines, they won’t stand up to point any fingers.”


However, reiterating Asia’s commitment as a whole to the maritime regulatory reform, Dick van den Broe Humphreij from the European Shippers’ Council said that the GSF has established that Japan “finally is going to copy this system of the rest of world, i.e. they will abolish the exemption for cartels”.


Emphasising the importance for the regulatory framework to be completed on an international scale, Mr Traill said that before the EU regulation comes into force in October 2008, there is nothing stopping global liners convening in Asia to collude and then implement their pricing into EU trades in a way that may not look like it’s collective action.


“That’s why it’s important that we have to have this in Asia because of the influence,” he said.