The European Association for Forwarding, Transport, Logistics and Customs Services (CLECAT) has sent a letter to the European Union, urging for an inquiry into the container shipping sector, alleging unfair and discriminatory practice.
“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 in the downstream market,” CLECAT suggests, claiming discriminatory conduct towards freight forwarders will ultimately disadvantage shippers and end-consumers because of restricted choice in services and higher rates.
CLECAT has sent a letter to Margrethe Vestager, the EU’s commissioner for competition, asking the European Commission to use its powers of investigation to establish the degree of concentration, consolidation, coordination, and cartelisation in the upstream container liner shipping services markets serving the EU, and the downstream markets for freight forwarding services.
CLECAT has called on the commission to investigate under the EU competition rules, and in the context of the Consortia Block Exemption Regulation (CBER) review, the marketplace effects of the combination of the block exemption, vertical integration, consolidation, control of data and the resulting market dominance.
Nicolette van der Jagt, director general of CLECAT, commented: “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.”
She added: “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 BCOs, SMEs and freight forwarders—which then lead to higher rates for everyone.”
To date, the European Union has ducked away from pursuing liner investigations, while other jurisdictions, notably the US, have been looking into the matter in recent months. Liners made a combined profit in excess of $200bn last year, while also presiding over the worst period of schedule reliability in the history of containerisation.
author: Sam Chambers