The European Association for Forwarding, Transport, Logistics and Customs Services (CLECAT) sent a letter to the European Union, calling for an inquiry into the container shipping sector, claiming unfair and discriminatory practice.
European businesses continue to experience rising container shipping costs, a record low level of reliability and reduced choice of services.
In addition, freight rate hikes over the last 18 months have led to damaging inflation and increases in the Union’s costs of living as recently identified by the OECD.
The profiteering of ocean shipping carriers resulting from their capacity management strategy allowed them to acquire the market power and financial war chest that they are now using to vertically integrate, increase rates and drive out independent freight forwarders in the downstream market
said CLECAT, adding that new discriminatory conduct towards freight forwarders, the key organiser of service delivery across all modes of transport in door-to-door operations, will ultimately disadvantage shippers and end-consumers because of restricted choice in services and higher rates.
For this reason, CLECAT calls on the Commission urgently to investigate under the EU competition rules, and in the context of the Consortia Block Exemption Regulation (CBER) review, the marketplace effects of the combination of the block exemption, vertical integration, consolidation, control of data and the resulting market dominance.
In particular, the Commission must investigate the skyrocketing rates which have led to the alliances’ forecast profits of over $200 billion during the Covid crisis despite the absence of any increase in their costs or any reason that can be attributed to the pandemic.
CLECAT notes that the combination of these factors has enabled the carriers to cherry pick the highest volume shippers for longer term contracts and relegate the others to the spot market where they will pay multiples of the rates offered to the favoured few.
Commenting on the call Nicolette van der Jagt noted:
The vertical integration is particularly unfair and discriminatory as carriers – enjoying an exemption from normal competition rules – are using the windfall profits to compete against other sectors that have no such immunity
she also noted that consolidation is also problematic as fewer carriers lead to fewer service options, constraints on the supply of space and market dominance that, in turn, enable a few carriers to discriminate among larger BCOs, SMEs and Freight Forwarders, which then lead to higher rates for everyone.
Finally, exclusive control of supply chain data and data standards through agreements among the same carriers, presumed by them also to be protected by antitrust immunity, gives them even greater control over the market.
According to CLECAT, exclusive control of access to this critical data platform reinforces their power to limit competition and enhances their ability to control rates not only for ocean shipping services, but also for end-to-end services up and down the supply chain.
The availability of these special privileges harms the relations between shipping lines and freight forwarders and their customers and takes away the trust which is so much needed at times of continuing congestion and disruptions
Ms van der Jagt concluded.
