Shippers and forwarders demand change in container shipping market

Container Shipping

A letter written by two trade associations illustrates the pain that shippers are feeling at the rise in sea freight rates and the “current practices of liner shipper carriers”.

CLECAT (European Association for Forwarding, Transport, Logistics and Customs Service) and the European Shippers Council who represent freight forwarders and shippers respectively, have written an open letter to the European Union’s competition authorities demanding action over what they say is container shipping line’s abuse of the market. They express their anger at what they describe as the “violation of existing contracts, the establishment of unreasonable conditions concerning the acceptance of bookings and the unilateral setting of rates far in excess of those agreed in contracts.”

Their description of what they say is carrier’s unacceptable behaviour is interesting. The two organisations say that shipping lines 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. Similarly, shippers and forwarders are being 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 a much higher price. For instance, the Shanghai Shipping Index reached a new record high of $2641.87 per TEU on Christmas Day.”

The result is “European supply chains are becoming more distorted” and the viability of small businesses are threatened.

As a solution to this problem, CLECAT and the European Shippers Council demand that the European Commission authorities rethink their position on block exemption, viewing it as inappropriate for the present structure of the container shipping market.

Although this list of complaints might be viewed as special pleading by freight forwarders and customers of the shipping lines, they make interesting points about the justification of conferences. It is clear that the sector’s consolidation has resulted in structural change in the balance of power between shippers and shipping lines. This may not last, but it does not seem illogical that issues such as block exemption may at least need to be considered in the light of such change.

Source: Transport Intelligence, January 7, 2021

Author: Thomas Cullen

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