Report: Shippers must ‘stay alert’ of the risks of carrier consolidation

A new report from the European Shippers Council outlines the potential positive and negative effects of large-scale ocean carrier cooperation and alliances.    The European Shippers Council said last week that while it welcomes cooperation among container liner carriers as a means to improve service and competitiveness, shippers need to “stay alert on the potential risks of concentration such as reducing of number of direct calls, increasing of transit time or artificial capacity management.”
   The council made those remarks in the midst of releasing a new report, “Shippers, alliances and fair competition,” prior to last week’s meeting of shipping regulators from the U.S., European Union, and China in Brussels.
   “Very recent and still growing concentration of the market has increased the risk that distortion of fair competition may happen in the future with its potential impacts on the market for all end consumers,” said the report.
   The paper outlined what it calls “four pillars for achieving a sustainable maritime transport.”

• Collaboration among shippers, forwarders and associations to collect data such as “perceived service quality from customers’ view, reach of the network, contract quality, availability of cargo space, surcharges customer service quality.” ESC said it has been gathering information on capacity, announced general rate increases, direct port calls and transit times since the beginning of last year and will publish the information quarterly. It also suggests surveys and interviews of active shippers of all sizes could be conducted.
• Having shippers report information to the main competition authorities. “Competition authorities, in order to protect customers’ interests and to guarantee a fair market operation, need to get first-hand information from suppliers but also to cross check such information by receiving some of the data collected from customers. This will allow them to properly assess whether and how alliances are effectively contributing to an increased quality of services, to a sustainable container transport sector and improvement of the global logistics performance,” said ESC.
• Creating new or strengthening frameworks for communication between shippers and ship operators in order to “better identify the global expectations and constrains of each of these parties and avoid misinterpretation of apparent actions.”
• A joint action plan between main competition authorities. ESC suggests the three main competition authorities regulating world shipping — the Federal Maritime Commission, Competition Directorate of the European Union and Ministry of Commerce from China — agree among themselves on how to define markets and calculate market shares of carriers when looking at potential anti-competitive behavior; establish a “harmonized public file to be submitted by all carriers who want to collaborate” and allow shippers and other stakeholder to comment; and that the three regulators obtain legal authorization to exchange information in order to cross check and consolidate various data.