FMC receives comments on EU ship regulation

FMC receives comments on EU ship regulation    Carriers have weighed in on the effect of the European Union’s decision to repeal the block exemption for liner shipping conferences in October 2008, as part of an investigation being conducted by the Federal Maritime Commission.
   The FMC request for comments as part of its notice of inquiry into the EU action drew 16 responses — 13 from individual carriers, two from Asian ship owner groups, and one from a consultant — which offered a wide variety of opinions about the end of antitrust immunity in Europe.
   Some carriers told the FMC the repeal has been no big deal, some said whatever effect it may have had was masked by the global recession, and still others said the repeal exacerbated turmoil in the shipping industry.
   The commission posted a questionnaire, and respondents had the option of making some or all of their comments confidential, and they could answer as many or as few of the questions as they liked. Here’s a smattering of comments from the dozens of pages submitted during the NOI:
   ' Maersk Line, the world's largest container carrier, told the FMC it has “not identified any appreciable impact on its commercial activities in any trade lane that it attributes to the termination of the EU block exemption. This is because of effective competition already being in place before September 2006' when the EU announced plans to eliminate the block exemption in 2008.
   Maersk said it did not believe any class of shipper or liner company benefited from or was put at a disadvantage from the end of the block exemption.
   It also said that it is accustomed to different regulatory regimes, but said it would be 'easier to conduct an international liner shipping business if there were more common rules' — pointing to the proposed U.N. cargo liability treaty commonly called the Rotterdam Rules as something that it feels would be beneficial if adopted on a global basis.
   ' NYK also said there has been no clear impact that can be identified since 2008.
   ' Chandler, Ariz.-based consultant Gary Ferrulli of Global Logistics & Transport Consulting said, 'the impacts were minimal: carriers offerings are roughly the same and reflect market place activities.'
   ' APL said the economic crisis 'masked whatever separate impact the revocation of the block exemption may have had,' and that it was 'impossible to draw any meaningful conclusions about short and medium term impacts of the change in EU law.'
   ' Hapag-Lloyd made a similar observation, suggesting the relative impact of the rule change could be better identified after the industry operates under normal economic conditions for at least two consecutive years without conferences. 'That can be expected to be in 2011-2012 (2010 still is an extraordinary year of recovery),' the German carrier said.
   But Hapag-Lloyd said, 'The major EU trades have experienced more rate volatility over the past two years than the major non-EU trades. We believe this relates at least in part to the stabilizing influence that comes from carriers being able to share market information and discuss general rate trends and establish voluntary rate guidelines.'
   ' Evergreen said, 'The increasing volatility of shipping market made it harder for small-size carrier to survive the market downturn.'
   Evergreen said the block exemption termination 'affected the development of the Far East/Europe and transatlantic trades.' Even though it was not a member of either of the conferences in those two trades, 'the abolition increased the volatility of shipping markets, which in turn affected the stability of supply chains,' it said.
   ' Yang Ming noted that with the end of conferences, 'we are no longer able to benchmark the conference tariff and surcharges, and have to handle pubic relations and other issues independently. To that end, we have, at our expense and at a detriment to our available resources, assigned a new dedicated team whose functions are to ensure EU compliance, develop trade intelligences collection, ensure tariff maintenance, and develop and provide employee education. Overall, there have been more constraints in daily business activities and the cost of doing business has increased.'
   ' The Japanese Shipowners Association told the FMC that antitrust immunity is 'indispensible for the healthy development of the international shipping industry, as well as the whole international trading industry. The immunity system is the international regulatory norm, as it is permitted in virtually all major trading nations around the world.' It added that it supported the decision by Singapore to extend immunity through the end of 2015 without any significant changes to its scope.
   The FMC launched its inquiry last fall into the EU's repeal of the liner block exemption, and had asked for comments to be submitted by Jan. 18.
   When it announced the inquiry, the FMC said it was 'cognizant of recommendations made by the National Industrial Transportation League,' the largest U.S. shipper group, to the Antitrust Modernization Commission in 2006 for such a review.
   FMC Chairman Richard Lidinsky said the study would cover the five-year period ending in December 2010.
   Lidinsky's counsel said the FMC plans to move forward analyzing the comments it has received to date from carriers and their trade organizations, but added the FMC 'generally quite welcoming if other parties or members of the public would like to submit additional input after our due date. We definitely want to hear from all sides of this issue.' ' Chris Dupin