Container shipping lines under fire, once again

Date Added: 10 January 2022

Container shipping lines under fire, once again

With our broad range of ocean freight forwarding and logistics services, Davies Turner is pleased that the British International Freight Association (BIFA), of which we are a long-standing member, has taken up the cudgels for logistics operators over concerns that certain practices undertaken by the principal container shipping lines, as well as exemptions provided to them under competition law, are distorting the operations of the free market to the detriment of international trade.

In a letter to Robert Courts MP, Parliamentary Under Secretary of State at the Department for Transport, BIFA’s director general, Robert Keen, has articulated the trade association’s concern that during a period of well-documented chaos within the container shipping sector, commercial power is becoming increasingly concentrated, resulting in diminished market choice and competition, and distorted market conditions.

“BIFA members fully accept that a free market economy is open to all, but are increasingly concerned that the activities of the container shipping lines, and the exemptions from legislation from which they benefit, are distorting the operations of that market to the shipping lines’ advantage, whilst adversely and unfairly affecting their customers, especially freight forwarders and SME businesses.

“The facts speak for themselves. During a period that has seen EU block exemption regulations carried forward into UK law, there has been huge market consolidation.”    

Keen points out that in 2015, there were 27 major container shipping lines carrying global containerised trade, with the largest having a 15.3% market share.

Today there are 15 shipping lines, organised into three major alliances, carrying that trade, with some analysts observing that the market share of a single alliance on certain key routes could be over 40%.

“The pandemic has highlighted and accelerated this development, which has also contributed to dreadful service levels, and hugely inflated rates, with carriers allocating vessels to the most profitable routes with little regard to the needs of their customers.

“Drewry recently issued a profit forecast of more than US$150 billion for 2021 for the main container shipping lines for which financial results are available.”

Putting this into perspective, he says, this is more than was achieved in the previous 20 years combined, which many BIFA members consider to be a case of blatant profiteering.

BIFA has joined a growing number of organisations, including Clecat and Fiata, the US Federal Maritime Commission, and the Australian Productivity Commission, in calling for governments at a national and pan-national level to give careful consideration to the evolving business arrangements in the container shipping market to see whether they are in breach of competition law.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact [email protected] or visit https://www.daviesturner.com/ocean
 

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