After being presented with data by the European Shippers’ Council (ESC) and European freight forwarder Association CLECAT; the European Commission has decided it doesn’t consider the large container spot rate increase between Asia and Europe as reason to investigate carriers for infringement of the Block Exemption Regulation (BER).
The shippers and forwarders claimed that massive rate increases were causing many small companies of “losing money and business.”
In response, the ESC said, “The commission responded to be fully aware of the present market situation, including recent price hikes which, from their point of view, were mainly due to the wane and surge on the demand-side as a consequence of the COVID-19 crisis.”
The competition commission cited two circumstances in which the EC would conduct an examination. First, when a formal review of the BER is relaunched in three years’ time. Secondly, in the matter of a legal complaint.
The ESC did acknowledge that the current global situation does warrant “a renewal of the discussions” with other maritime competition authorities, the US FMC and China’s Ministry of Commerce. The most recent discussions were held in 2019.
The result of the online meeting with the EC has led to CLECAT and the ESC to consider the possibility of filing an official complaint to the EC.
The decision by the EC to not intervene is disappointing for European shippers. Container rates from Asia have more than quadrupled over four months, and they will need to rely on actions by Chinese regulators to put a stop to skyrocketing rates. Th last action by Chinese authorities was in September.
Since the intervention by Chinese regulators, spot rates from Asia to the U.S. west coast have remained steady at about $4,400 per 40 ft. while rates from Asia to Northern Europe have gone from $2000 to $8,800 per 40 ft. With shippers often paying even more for premium equipment and fees for guaranteed space.
The BER allows container shipping lines to coordinate their networks and utilize space on vessels. It was renewed in April 2020 for four years stating that conditions allowing an anti-trust exemption remains largely unchanged.
The EC find the consortia agreement to be justified because “consortia generally bring rationalization and economies of scale” that “help to improve the productivity and quality of available liner shipping services”, which are beneficial to users. Concluding that consumers benefit from lower prices and better quality of service.