Shippers demand end to European consortia block exemption

The Global Shippers Forum (GSF has called upon the European Commission to revoke and replace the Consortia Block Exemption Regulation (BER). The European Commission is currently determining whether to extend the BER for a further five-year period from April 2020 with four shipowning bodies coming together last week to put their case forward for extending the BER.

James Hookham, GSF secretary general, commented: “GSF has joined the worldwide shipping community in calling for the European Commission to not renew the BER. GSF has recommended these special privileges should come to end and the liner shipping industry should begin the transition to normal competition conditions. There is, potentially, scope for the existing legal instruments to be replaced by modified or augmented arrangements, but only where the impact of this transition could cause unnecessary disruptions. The parameters of any replacement regime should be discussed and consulted upon by the Commission with the representatives of the stakeholders, which would have the additional benefit of engendering a much-needed consensus on the future of a vital industry.”

The BER allows shipping lines with a combined market share of below 30% to enter into cooperation agreements or to provide joint cargo transport services, justified on the basis that this would facilitate improvements in productivity and service levels.

Four trade associations representing the international liner shipping industry on Thursday submitted comments to the European Commission supporting the extension of the BER for an additional five years beyond its current 2020 expiration date.

The papers were submitted in the public consultation being held by the commission’s directorate-general for competition (DG COMP) by the World Shipping Council (WSC), the European Community Shipowners’ Associations (ECSA), the International Chamber of Shipping (ICS), and the Asian Shipowners’ Association (ASA).

The industry comments claim vessel sharing arrangements are a fundamental part of the structure of the global liner shipping transportation network and that the consortia BER has since 1995 provided transparent and practical legal guidance to vessel sharing arrangements for international liner shipping services operating from and to EU ports.

The submission goes on to maintain that despite recent mergers in the liner industry, the industry remains unconcentrated and highly competitive, with freight rates at half of their levels 20 years ago.

From an environmental point of view, the associations said the BER helps carriers reduce air emissions and greenhouse gases through higher utilisation of vessel space.

The block exemption has hit the headlines in recent weeks with a number of important voices suggesting the EU should not renew it in 2020.

In a 127-page report on container alliances issued last month, the International Transport Forum (ITF), administrated by the Organisation for Economic Co-operation and Development (OECD), called on the EU to not renew the BER.

“A repeal of block exemptions is unlikely to result in the termination of current and future alliances, as these could still be authorised under competition law on a case by case basis,” ITF explained, adding: “However, it would ensure greater scrutiny of individual alliances and thus more effectively deter any anticompetitive conduct in the sector.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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