Tuesday, November 26, 2019

Shipping Lobby Objects to European Commission Decision on Vessel Sharing

Recommendation Ignores Poor Service and Lack of Competition
Shipping News Feature

UK – WORLDWIDE – The issue of vessel sharing has proved a contentious one and it seems is likely to continue to be so. Under the Consortia Block Exemption Regulation (CBER) as recommended by the European Commission (EC) shipping lines are allowed to offer a range of services by pooling capacity from each one on just one of the ships to a particular destination.

This policy has the effect of ensuring the ships carry higher payloads than if the route was covered by individual vessels from each of the lines. As far as the drive for lower emissions is concerned the policy is to be welcomed, less vessels on the same routes simply means less fuel used and pollution produced. Additionally the cut in costs make it more profitable for the shipping lines involved.

The EC has initiated a period of consultation in which time anyone can express their views on the extension of the CBER for another four years, the preferred option of the Commission. The link here will provide a gateway to the feedback forum which closes on 3 January 2020.

The EC decision to recommend the renewal of the CBER for a four year period from April 2020 has been attacked by the Global Shippers’ Forum (GSF) which says the decision ignores the views of exporters and importers to and from the EU, and those of their global suppliers and customers, who are concerned at continuing poor service levels in some trades served by consortia due to over-investment in capacity and seeming lack of competitive pressures.

The point was put vehemently by James Hookham, Secretary General of GSF, who said in a statement:

“We are disappointed with the outcome of the Commission’s review and disagree on several points with its reasoning. We shall be setting out our concerns and arguments in response, and campaigning for greater policing of shipping lines’ activities. Shippers are well used to similar pooling arrangements in the aviation sector, which allows code-sharing arrangements to be established for the same aircraft. But these seem to be fully compatible with EU Competition law without the need for a Block Exemption.

”What is it about the global shipping lines that warrants this form of exceptional treatment under competition law? We are not convinced by the Commission’s arguments or conclusions. In our view the Commission 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 and whether the continuing exemptions from normal competition rules provided by the Block Exemption are the right remedy in the long term.

“The Commission looks set to prop up the shipping lines for a further four years without fully understanding why. European manufacturers and retailers, together with their customers and suppliers around the world, as the users of container shipping lines, deserve better support and service from their competition authority.”

The lines themselves see the situation in a completely different light, stating that the cooperation between them makes for a more efficient industry with less pollution and potentially lower costs. The situation has resulted in the formation of the Digital Container Shipping Association (DCSA) in April this year, an organisation which sees major container giants such as Maersk, MSC, Hapag Lloyd, CMA CGM, ZIM, ONE, Evergreen, HMM and Yang Ming working together to exchange information.

Photo: A decade ago vast fleets of empty ships were moored around the world as a shortage of cargo left the shipping lines struggling for survival (and some of course didn’t).