ELAA delivers conference alternative to EC

ELAA delivers conference alternative to EC    Ocean carrier lobby group, the European Liner Affairs Association, has delivered to the European Commission its revised proposals for a post-liner conference system in Europe.
   In December, the EC made its proposal to repeal Regulation 4056/86, which grants liner conferences an exemption to set common freight rates and cooperate on capacity. The EC said at the time that the ELAA’s original information exchange system plans “should not be accepted as is.”
   “In putting forward this revised proposal the ELAA wishes to emphasize three critical points: its membership is united in its agreement over the details outlined; it is adamant that without these tools it will be impossible to provide stable and reliable liner shipping services that will continue to make possible development of the global economy; and that it remains committed to an open meaningful dialogue with all parties concerned in the debate,” the ELAA said.
   Highlights from the ELAA’s revised proposal are:
   * “The establishment of a port-to-port aggregated volume database, based on figures supplied by the carriers to an independent data service.”
   * “Provision for an industry supply and demand forecast produced with the help of an independent expert.”
   * “Acknowledgement of the need to improve industry-wide consultation; this would be organized by a Liner Shipping Association. This system will include carrier discussions as well as consultations with other industry stakeholders. The objective is to improve our collective understanding of the trends in our business. We must also consider the requirements of our customers as represented by shippers’ organizations.”
   * “Establishment of a simple aggregated price index by trade direction.”
   * “Publication of information from the public domain, which will increase the transparency of our costs such as bunkering, canal dues, port charges and currency exchange rate exposure.”
   * “The absolute necessity for all the information generated being made available to the general public and the benefit of all industry stakeholders, carriers, shippers, freight forwarders, port authorities, governments and others.”
   “It is important that all of us in the industry, carriers, shippers and regulators, remember that we have a crucial responsibility to ensure this vital industry has an effective flexible regulatory system capable of coping with the future demands of the global economy,” said Chris Bourne, the ELAA’s executive director.
   “Brussels has challenged us to review the way we organize our business today and, in particular the way in which we communicate within the industry. The liner shipping industry has taken this opportunity to update the manner in which we do business, which should be based on shared knowledge. This outlook will be critical to the future functioning of a highly efficient, modern and transparent liner industry,” Bourne said.
   Admitting that it hasn’t fully read the 200-odd page document, rival shippers' group the European Shippers’ Council, said it has some major concerns about the proposals.
   “I fear that this is something akin to a wolf in sheep’s clothing,” said Nicolette van der Jagt, secretary general of the ESC. “There is a lot of detail in these proposals; they recommend the EC to allow carriers on all trades to and from the EU to discuss and interpret data and market analyses, and then later discuss with shippers the same data and information. The lines will have formed an opinion on what the data means for them and how they are likely to respond. What is to stop a general unwritten acceptance of such conclusions among all the carriers, so that consultation with shippers becomes little more than the lines telling shippers what they can expect? How can any shipper then individually negotiate different service levels, terms and conditions and prices if confronted by such a united front from the carriers?
   “We have repeatedly questioned why a price index is required by the lines; why do they need to discuss and interpret together market information, forecast capacity availability and deployment, traffic volume data and surcharges. They have dropped the call to establish between them common formulae for determining surcharges, but my members are suspicious about the intentions behind their revised plans to publish movements in those costs that are currently separated out into surcharges, such as currency, fuel and port surcharges.
   “Again, however, it is the notion that all carriers could be involved at arriving at a common interpretation of the data and what it will mean in terms of carrier strategy, that fills us with most trepidation.
   “This could be a liner conference or discussion agreement via the backdoor. We argue that cooperation technically and commercially between competitors or with customers and other service providers are well catered for under existing competition rules, within defined market share boundaries in order to prevent market dominance and collusion. The ESC sees no reason why the information exchange concept could not be considered in a similar way, shared among groups of companies, groups restricted in size by competition rules based on market share thresholds.’
   “We have no problem with the notion of making better information more publicly available in order to facilitate better business decisions, but not at the expense or risk of anticompetitive practice or collusion in the market. The European Commission and Member States should reject the ELAA proposals and insist on the liner shipping industry operating under normal rules of competition that apply to the rest of us,” van der Jagt said.
   The EC is expected later this year to publish its guidelines on the application of the competition rules to the sector and to examine any potential replacement model.
   A full transcript of the ELAA’s revised proposal is available on the Web site of the EC’s Directorate General of Competition at: https://ec.europa.eu/comm/competition/antitrust/legislation/maritime/