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FIATA alarmed by shift to spot rates

[ January 6, 2022   //   ]

FIATA says that a recent notice to users by shipping line AP Moller–Maersk Group will restrict access for international freight forwarders in many countries economies through a shift from contracted arrangements to spot rates

The international forwarders’ federation says it could seriously disadvantage the industry and ultimately hit shippers and consumers.

FIATA describes such practices as amounting to “market domination and competitive distortion”, and have been made possible by way of government tax reliefs and subsidies to shipping lines in a variety of jurisdictions. Dramatic changes have already taken place in the number of shipping lines providing service offerings for the international movement of goods by sea, with mergers and acquisitions over the past two decades seeing consolidation into a handful of dominant shipping lines who have furthered that dominance by forming key alliances.

These lines and alliances have also set out to vertically integrate services through the acquisition of terminal handling operations, national and international freight forwarding entities. In most countriess, regulators have been slow to take action on the anti-competitive aspects of mergers or alliances it adds.

FIATA director general, Dr Stéphane Graber, said: “These changed arrangements, which have been accelerated and facilitated by the pandemic, have resulted in significant unanticipated profits by these few and their ability to determine the viability of others offering freight services in a now highly disrupted and volatile marketplace

FIATA said however that it welcomed the work being undertaken by the US Federal Maritime Commission and the Australian Productivity Commission to publicly look into evolving business arrangements. It urged other countries to follow suit through the World Trade Organization, or the European Commission.

Dr Graber added: “The protection afforded to shipping lines under a variety of economies’ antitrust/anticompetitive legislation is now, in reality, a relic of the past and must now be questioned in all jurisdictions as to shipping line marketplace domination, competitive neutrality and price setting.”

FIATA says that increase seafreight rates delivered “unimaginable profits” to those in dominant market positions, whilst having a detrimental impact on small and medium-sizedshippers,. FIATA notes with concern that the impact of logistics on the US Consumer Price Index was one of the highest for over 30 years in 2021.

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