Shippers decry Singapore liner antitrust extension

Shippers decry Singapore liner antitrust extension    The Global Shippers' Forum, Asian Shippers' Council and Singapore National Shippers' Council this week filed comments with the Competition Commission of Singapore (CCS) strongly opposing that country's proposal to extend antitrust immunity to liner carriers.
   The CCS is recommending to extend a block antitrust exemption from December through five more years, on the basis that repealing the exemption could induce liner carriers to stop calling Singapore, home to one of the world's two busiest container ports.
   But the GSF, ASC and SNSC decried that reasoning in their comments, saying that allowing conferences and discussion agreements hurts the competitiveness of shippers.
   All three bodies pointed to potential legislation in the United States that would repeal liner antitrust immunity, as well as investigations by the U.S. Federal Maritime Commission into carriers' practices of overbooking and rolling cargo. These actions, coupled with the European Union's ban on liner conferences, show that antitrust protection is losing favor on a global basis, the shippers' councils said.
   'The GSF, ASC and Singapore National Shippers' Council (SNSC) have yet to see the Singapore Competition Commission review impact assessment, but note that carriers have, in numerous recent inquiries around the world, failed to provide any reliable evidence or economic data, which they have exclusively within their control to provide, to justify the case for an exemption from competition and antitrust laws,' the GSF said in a statement. 'The burden of proof must rest with the liner shipping industry to demonstrate the need for price-fixing, rate-setting and carrier discussion agreements regarding the exchange of commercially sensitive information.'
   The SNSC, focusing more locally on Singapore's shippers, said carrier customers in Asia are faced with a barrage of coordinated surcharges that shippers don't face in areas without liner antitrust protection.
   'Over a one-year period, freight rates ex-Asia to the U.S. have risen by over 180 percent to over $2,600 per 40-foot container in June 2010,' the SNSC said. 'Asia has more shipping conferences than anywhere else in the world, and Asian shippers have had to put up with more surcharges than anywhere else in the world. The correlation between the two — shipping conferences and surcharges — is hard to miss.'
   Adding insult to injury, the SNSC argued that increased rates have coincided with poorer service.
   'While rates have now reached pre-recession levels, the service levels have never been worse,' said the SNSC. 'The lead time for delivery is longer, as lines adopt slow steaming, even containers with confirmed bookings have been bumped off because of the artificial shortage which was created, and surcharges are being imposed arbitrarily.'
   The SNSC also said the Singapore government's concern that repealing antitrust exemption would undermine the country's status as a maritime hub was not valid.
   'We are not convinced that liner shipping companies will carry out their threat to withdraw en masse from the Singapore port should the CCS fail to extend the block exemption,' the SNSC said. 'Shipping lines have opted to call at the Singapore port for sound commercial reasons — that it is efficient, price competitive and above all, it has the volume because of its unmatched connectivity. It has taken years for Singapore to build up this capability, and lines will find it difficult commercially and operationally to drop Singapore as their regular port of call. As this is an empty threat, the CCS should call their bluff.'
   Meanwhile, the ASC, which represents shippers' councils throughout the continent, said Singapore should get in line with developments in other parts of the world, where support for conferences and discussion agreements is eroding.
   'No matter what the proponents may say, the conference system is unraveling, though the pace is slower than what we would have like,' said the Asian Shippers' Council. 'In the 1980s, the closed conference system became a thing of the past. In the 1990s, the U.S. Ocean Shipping Reform Act (OSRA) was introduced, which provided the U.S. government oversight over liner shipping. In the new millennium, shipping conferences were outlawed in the European Union. We believe the conference system will be consigned to history before this decade is out, as the collapse of the system in the U.S. will precipitate similar developments elsewhere.' ' Eric Johnson