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Liner collusion – it’s worse than you think, says Global Shippers Forum – updated

[ June 28, 2022   //   ]

Current measures to create competition in liner shipping fail to take full account of the degree of co-operation between carriers according to the latest Container Shipping Market Quarterly Review by MDS Transmodal and the Global Shippers Forum (GSF). 

The report suggests that a modified measure is used that better reflects the degree of cooperation by lines, not just through the three big alliances but also agreements under which lines in different alliances operate shared services.

GSF also believes that the recent Fact Finding Investigation report published by the US Federal Maritime Commission in May does not yet provide a complete picture. It says that the report maintains that liner trades serving the US exhibit ‘vigorous competition’.

GSF urges a more accurate measure that takes into account the concentration in market share achieved through all agreements permitted under block exemption and anti-trust immunity provisions.

“This breakthrough analysis lays bare the degree of dominance that many shipping lines actually have in the key global trades,” comments GSF’s Director James Hookham.  “Current measures of market concentration are only seeing part of the picture. Not only are there consortia operations within the three main Alliances, the number of separate consortia that exist consisting of lines from different Alliances is also significant.” 

“Competition authorities should urgently revise their measures of competition to reflect the reality of the container shipping market and ensure they capture the full extent and effects of shipping line co-operation, as experienced by shippers”.

GSF argues that a lack of, or reduction in competition leads directly to poor service quality for shippers.  The Quarterly Review showed that the number of port calls achieved in comparison with those scheduled fell to 68%, the lowest since this analysis began in 2020.

While the amount of capacity lost through skipped ports in Europe declined in the first quarter of 2022, it continued to rise in Asia and Australia.

Chairman of MDS Transmodal, Mike Garratt, concluded; “Several shipping consortia arrangements involve the constituent shipping lines controlling more than 30% of capacity in the Asia to Europe market, in excess of the principle established in the EU’s Consortium Block Exemption Regulation. Scheduled capacity between world regions has fallen and though our analysis indicates that service reliability has now stabilised the number of port calls skipped continues to grow.”

FIATA also warned that shipping lines were abusing their dominant position in the market, while regulatory anti-trust exemptions which are out of step with the current situation.

In a discussion paper, the forwarder’s organisation called for a review of regulatory measures supporting shipping lines to ensure that they are fit for purpose and do not hinder level fair market competition and called on industry stakeholders and market regulators to take action to ensure a balanced and fair trading system.

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