Forwarding, Freight News, Sea

Shipping lines pose existential threat to forwarders, says CLECAT

[ February 18, 2022   //   Chris ]

The CLECAT European forwarders’ organisation has called for an urgent enquiry into the container shipping sector to remove “unfair and discriminatory rules”, warning that smaller freight forwarders could be driven out of business..

In a letter to a letter to competition commissioner Margrethe Vestager, the Brussels-based group says that  European businesses continue to experience rising container shipping costs, record low reliability and reduced services. It says: “The profiteering of ocean shipping carriers resulting from their capacity management strategy allowed them to acquire the market power and financial war chest that they are now using to vertically integrate, increase rates and drive out independent freight forwarders.”

CLECAT complaints of “new discriminatory conduct towards freight forwarders” that will ultimately disadvantage shippers and end-consumers because of restricted choice in services and higher rates.

It asked Margrethe Vestager for the European Commission to use its powers of investigation urgently to establish the degree of concentration, consolidation, coordination, and cartelization in the upstream container liner shipping services markets serving the EU, and the downstream markets for freight forwarding services.

It also called on the Commission urgently to investigate the effects of the combination of the block exemption that allow shipping alliances and consortia to operate, along with the skyrocketing rates which have led to the alliances’ forecast profits of over $200 billion during the Covid crisis.

CLECAT complained that carriers were cherry picking the highest volume shippers for longer term contracts and relegated others to the spot market where they will pay multiples of the rates offered to the favoured few. At the same time, freight forwarders are being ‘disintermediated’.

CLECAT director general Nicolette van der Jagt noted: “The vertical integration is particularly unfair and discriminatory as carriers – enjoying an exemption from normal competition rules – are using the windfall profits to compete against other sectors that have no such immunity. Consolidation is also problematic as fewer carriers lead to fewer service options, constraints on the supply of space and market dominance that, in turn, enable a few carriers to discriminate among larger cargo owners, businesses and freight forwarders.”

CLECAT added that exclusive control of supply chain data and data standards through agreements among the same carriers, presumed by them also to be protected by antitrust immunity, gives them even greater control over the market

But Nicolette van der Jagt said: “We regret that the Commission has so far ignored the important messages from many stakeholders who depend on a healthy maritime container logistics supply chain.”

Tags: Clecat