The European Commission has formalised its decision to extend the Consortia Block Exemption Regulation for four years. But forwarder representatives say shippers’ voices have been ignored.
Carriers will be welcoming the formal extension of the Consortia Block Exemption Regulation, but not everyone in the supply chain is as happy with the decision.
In an emailed response to Lloyd’s List, Nicolette van der Jagt, director general of the European Association for Forwarding, Transport, Logistics and Customs Services, said that while the decision came as no surprise, it came at an interesting time when all in the supply chain were doing all they could to keep trade moving.
“We have, since mid-December when the commission issued its preliminary decision, expressed our strong disappointment with the fact that the commission has fully ignored the position of the users of container line shipping services, as well as their service providers, who have advocated since the beginning of the review process that the current CBER is obsolete, given the increased market concentration in liner shipping combined with the deployment of ultra-large container vessels,” Ms van der Jagt said.
She argued that the one of the conditions of the exemption was to provide benefits to carriers’ customers, but that falling service quality and productivity meant that this had not been met.
“Instead, the users of container line shipping services and their service providers have suffered from an increasingly unbalanced market situation since carriers entered into major co-operation agreements,” she said.
While Clecat was not against consortia or alliances per se, it considers the block exemption “far too generous” in view of market developments over the past five years.
Moreover, it believes the commission relied to heavily on data supplied by the carriers in its assessment of the extension while discounting the anecdotal evidence provided by shippers and other service consumers.
“The commission has assessed the workings of the CBER only from the perspective of carriers and the commission itself, as the competition regulator,” Ms van der Jagt said. “There is no explicit assessment against the experiences and expectations of customers of the services provided by consortia.”
She added that the block exemption was not suitable as a legal instrument to regulation anti-competitive behaviour in the shipping industry.
“The container line shipping industry has changed massively in the past 10 years by the alliances and mega-vessels; but what we see is a copy and paste of a 10-year-old regulation,” she said.
Meanwhile, the Global Shippers’ Forum said the CBER was “unfinished business” and added it was “disappointed and frustrated” by the decision.
But it added that it recognised the need for global supply chains to be kept functioning under the current extreme conditions created by the coronavirus outbreak. The decision would provide continuity for consortia in the short term.
“With global shippers focused on keeping the world trading as best they can, the unqualified extension of the CBER until 2024 will be a surprise and feel as if the commission has taken advantage of the coronavirus crisis to push through an unpopular and contested decision,” said GSF secretary-general James Hookham.
“But now is not the time to challenge this. Everyone in the global supply chain has a bigger job to do in getting the world through the current extraordinary conditions. However, GSF gives notice it considers this is as unfinished business and it will be revisited once the industry recovers.”
The GSF said the decision failed to acknowledge “the powerful case made by shippers” and other groups that challenged the commission’s reasoning for prolonging the CBER.
“It seems user’s views and needs have been utterly ignored and not considered in reaching this decision,” it said. “In time, GSF will expect and demand an explanation of its actions from the commission.