European shippers and freight forwarders warn the European Commission about the current practices of liner shipper carriers, as European supply chains are becoming more distorted.
In a joint letter to the Competition Directorate of the European Commission, the European Freight Forwarders Association (CLECAT) and the European Shippers’ Council (ESC) have informed the Commission about issues arising from carriers’ ongoing practices.
These regard violation of existing contracts, the establishment of unreasonable conditions concerning the acceptance of bookings and unilaterally setting rates far in excess of those agreed in contracts.
According to the letter, this situation is particularly affecting small European businesses with limited financial reserves. However, the adverse consequences of carriers’ practices are felt equally by many larger companies, including retail, fashion, automotive, cosmetics and IT businesses.
Carriers have been reserving for themselves the ability to change rates whenever they see fit notwithstanding the specific rates and charges agreed. Carriers are continuing to top their rates with surcharges, general rate increases, etc
the letter reads.
It also notes that shippers and forwarders will be confronted with refused bookings and rolled cargo if carriers deem it more profitable to accept higher rated cargo for a particular sailing.
Unacceptable practices also include imposing an extra fee as a price for accepting cargo at a new tariff charge, simply refusing to accept bookings at all for customers, forcing a customer with contract rates to move it to spot rates at much higher price.
Now, the disruption in the supply chain because of the unprecedented number of blank sailings, combined with the lack of reliability, has led to the current shortage of empty containers. Carriers are trying to ship containers back to China as fast as possible, as there is a need and profits are extremely attractive.
However, this created a domino effect, where forwarders and shippers are also confronted with all sort of new surcharges such as ‘equipment imbalance surcharges’ which carriers are imposing.
Last year, shippers, forwarders, terminal operators and others in the maritime supply chain expressed their dissatisfaction with the decision of the European Commission to extend the block exemption regulation for liner shipping.
Consortia agreements authorise carriers to collectively agree on blank sailings. The current shortage of capacity has enabled carriers to significantly raise rates on spot market cargo and for cargo under contract. The unreasonable practices of carriers regarding container equipment, rates and demurrage and detention charges present a serious risk to the ability of economic recovery in Europe
ESC and CLECAT warn.
For this reason, they encourage the European Commission to take actions similar to those of competent authorities in other parts of the world.