WSC and ICS welcome the extension of consortia block exemption regulation – GSF, ESC and GSA disagree

Brussels, Belgium (Ports Europe) March 25, 2020 - Washington, D.C.-based World Shipping Council (WSC), whose carrier members account for more than 90% of the international container trade, and the International Chamber of Shipping (ICS), which represents over 80% of the world merchant fleet, applauded the European Commission (EC) decision from March 24 to exempt from antitrust rules against anti-competitive agreements cargo shipping companies for a further four years. But the Global Shippers’ Forum (GSF), European Shippers’ Council (ESC) and Global Shippers Alliance (GSA) were against the prolongation of the exemption. First adopted in 2009 and extended for five years in 2014, the consortia block exemption regulation (BER) will be prolonged to April 2024, because according to the EC, this leads to lower prices and better consumer services. These agreements, however, cannot include price-fixing or market-sharing. “The BER consortia results in efficiencies for carriers that can better use vessels’ capacity and offer more connections,” the European Union (EU) competition enforcer said. “Vessel-sharing is the backbone of the global liner shipping network,” said John Butler, the WSC’s president and CEO. We should not underestimate the value of this tool for smaller carriers and lower volume trade lanes where demand might not otherwise support as many competitors. The liner shipping industry has maintained support for the BER because it creates legal certainty for the use of vessel sharing agreements, which are essential operating tools used by carriers to provide customers with better services at lower cost and with improved environmental performance. We saw the conclusions that the EC reached when it published its Staff Working Document (SWD) last fall, and we are pleased to see that the final decision concurs with the earlier findings." According to the SWD, consortia allow their members to pool their vessels together and provide services or frequencies that carriers would not be able to provide on their own means; cost efficiencies have been passed on to customers to a material extent over the evaluation period; quality of services has not deteriorated but rather remained stable since 2014. “The decision is very important because it will also influence the position taken by other competition authorities around the world”, ICS Deputy Secretary General Simon Bennett said. “While the Commission arrived at its important decision before COVID-19 took hold, the knowledge that co-operative vessel sharing arrangements can continue with legal certainty will assist the recovery of global maritime trade once the current crisis is over”. The liner shipping industry transports more than 45 million TEU (twenty-foot equivalent unit) of imports to and exports from the EU a year, valued at over €1.4 trillion ($1.52 million). The trade body the GSF had previously criticized the exemption, saying it was not the solution to the industry’s woes. “The EC has missed the opportunity to ask the bigger questions about how the shipping sector got into its current situation of historically low shipping rates and over-capacity on many routes,” GSF secretary-general James Hookham said in a statement in November last year. ESC and GSA also disagree with the EC’s conclusion that the EU block exemption for vessel-sharing arrangements benefits shippers and want it terminated. According to the ESC, the exemption from antitrust rules against anti-competitive agreements for the cargo shipping companies is not in the interest of the service levels. GSA said in December 2019 that it supports ESC position regarding the intention of the EC to extend the BER for another four years. This extension will bring negative consequences for the market: “For GSA, it is obvious that the service delivered by container lines is still not up to standard. Even the most essential parts of the contract, such as departure and arrival times, are often not respected (the situation with blank sailings, in general, has not improved). The contract of carriage should be seen as a legal agreement which should be binding for partners in the supply chain. For the moment, the market power, especially for smaller shippers, is not sufficient to successfully enter into a court procedure. The extension of the BER, certainly, will not improve the situation. As the EC has issued legal rules to protect travellers taking air and rail transport, a comparable protection should be considered for shippers and specially for cargo, which is the trigger which moves the economy”. Copyright (C) Ports Europe. All Rights Reserved. 2020.

WSC and ICS welcome the extension of consortia block exemption regulation – GSF, ESC and GSA disagree

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WSC and ICS welcome the extension of consortia block exemption regulation – GSF, ESC and GSA disagree

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Kazakh ambassador visits Shahid Rajaee Port, Iran

Russia’s Makhachkala port privatized, new owner is a sanctioned billionaire

India operates first phase of Chabahar port, Iran

Russia’s Far Eastern ports to grow cargo to 316 mln tonnes by 2030

Finland seized tanker with Russian oil suspected of damaging Baltic power, internet cables

Our Expert Analysis

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