EU freight forwarders fury over EC failure to join Five Eyes liner probe

A global initiative to investigate liner shipping in the wake of the pandemic has been set up by the so-called Five Eyes Group, which does not include the EC – to the anger of European freight forwarders.

Freight forwarders have increased pressure on the EC to investigate some of the latest shipping company practices, which they see as anti-competitive and an abuse of their dominant position.

Freight forwarder representative Clecat wrote to the EC again last week, following their earlier efforts, with the World Shippers Forum among others, to get the EC to investigate major price increases and other carrier practices that freight forwarders believe hinder their business, or worse, shut them down altogether.

Todaym Clecat managing director Nicolette van der Jagt said The Loadstar“We urge [EC commissioner] Ms Vestager will also investigate the four largest EU-owned container lines, MSC, Maersk, CMA CGM and Hapag Lloyd. I wonder if the Anglo-Saxon countries trust him to protect the economy of the EU and its partners so hard hit by inflation and the cost of living.

Contrary to the EC’s approach, regulators from the US, UK, Australia, New Zealand and Canada have come together to launch a global investigation into a liner industry that has achieved historically high profits last year and is on track to rake in similar amounts this year. .

“Temporary supply chain disruptions should not be allowed to disguise unlawful conduct,” said Assistant Attorney General Jonathan Kanter of the U.S. Justice Department’s Antitrust Division. “The Antitrust Division will not allow companies to collude to overcharge consumers under the guise of supply chain disruptions.”

The Five Eyes approach stands in stark contrast to Europe, which has apparently refused to get involved.

An EC spokesperson said The Loadstar“The commission is closely monitoring the container shipping industry and is aware that there have been, in particular, sharp price increases in the sector over the past year on routes to and from from the EU as well as other parts of the world.”

A particular target for freight forwarders and shippers has been the Consortia Block Exemption Regulation (CBER), which allows “agreements between shipping lines to cooperate in ‘consortia’, i.e. in the provision of regular and scheduled international maritime transport services”.

CBER is due to expire in 2024. However, the EC said: “Prior to its expiry, the commission will assess its impact and appropriateness to determine whether it should be extended and, if so, under what conditions. As part of the assessment, all interested parties will be invited to submit their comments on the draft rules.

In response to the Five Eyes initiative, Ms van der Jagt said: “We find this to be a timely and welcome announcement from the competition authorities who share the concerns we expressed last week in a 12-page letter of complaint addressed to Commissioner Vestager.”

She added: “Authorities include the most active law enforcement authorities in the world (excluding the EU). The cartel-busting group no longer has any significant business interests in the national container shipping companies, but is among the hardest hit victims of the capacity collusion. and price hikes on the back of the pandemic.

Europe’s small and medium-sized freight forwarders are infuriated by the methods employed by carriers, with some saying their very livelihoods are threatened by what freight forwarders say are underhanded tactics.

A freight forwarder from southern Europe wrote to The Loadstar: “All shipping companies charge an additional fee called lo-lo, in case you arrange inland transportation directly with the trucking company instead of using their service.”

The Loadstar saw a document from MSC to a freight forwarder, effectively charging €31 ($35) for not providing trucking service. Lo-lo fees are waived if online transport is used.

And a freight forwarder from Northern Europe said The Loadstar the lines “forced carrier carriage”, forcing the company to use spot rates rather than offer contracts.

He said: “This is an effective denial of service, in our case Maersk or Hamburg Süd both refuse to take our calls. But as I travel across Europe, I see that freight forwarders are treated differently, whatever your size. Some small businesses still get rates and allowances from Maersk in Turkey for example… but no longer in France. Why? No idea.”

The southern freight forwarder said the carriers were apparently “exchanging information on exporters/importers, volumes, pol, pod, target price, etc. and, of course, that’s not correct, because every shipping company should apply its own strategy instead of making agreements between each other”. other, to control the market.

The freight forwarder also believes that the vertical integration seen with some of the major lines distorts the market.

“If we both go to the same client and MSC gives you $10,000/40ft and me $14,000, can you tell me how do I get the client? It makes no sense to offer such a different rate that will never give me the opportunity to win.

Shipping companies are adamant that there is no wrongdoing and that their market practices are legal, but they blame inland infrastructure for major congestion that has driven up fares.

World Shipping Council President and CEO John Butler said: “Shippers are frustrated with the current market situation, as are carriers. Supply chain congestion is due to pandemic-induced extreme demand coupled with operational disruptions as manufacturers have closed factories and ports and inland logistics are overloaded, tying up capacity and reducing supply . It is this imbalance between supply and demand that has driven rates up.

“For most of the past 20 years, the container market has operated with overcapacity and shippers have had high access to low-cost, short-term ocean shipping. They are understandably frustrated that this is no longer the case, but there is no logic or evidence to jump to the conclusion that it is somehow due to illegal behavior.

Nevertheless, freight forwarders want to see regulatory measures.