FEFC TO FILE REQUEST FOR EC EXEMPTION FOR CAPACITY PLAN
The Far Eastern Freight Conference will seek permission from the European Community’s competition directorate to remove vessel capacity in the over-tonnaged Asia/Europe container trade.
A senior carrier regulatory executive said that the Far Eastern Freight Conference will apply for an individual exemption from European competition laws in the next fews weeks to allow the introduction of a joint capacity reduction plan by its conference carriers.
The plan, which has not yet been finalized, will seek to physically remove vessels from the trade, rather than collectively impose limits on the capacity utilization of existing vessels.
The European Commission is known to be totally opposed to the concept of ocean carriers implementing “capacity non-utilization agreements,” because such agreements fail to lower costs and take out actual capacity.
Last year, the FEFC successfully implemented a small-scale and short-term plan to remove some capacity during the Christmas slack period. The EC did not object to the scheme at the time.
The FEFC carriers are APL, CMA CGM, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk Sealand, Malaysia International Shipping Corp., MOL, National Shipping Company of Saudi Arabia, Nippon Yusen Kaisha, Orient Overseas Container Line, P&O Nedlloyd Container Line, Senator Lines and Yangming Marine Transport.
Ocean carriers are also considering steps to reduce capacity in the transpacific trade under the aegis of the Transpacific Stabilization Agreement, a discussion agreement without the authority to agree on joint rates.
China Ocean Shipping Co., Evergreen and Hanjin Shipping are members of the TSA, but not of the Far Eastern Freight Conference.