ESC: Shipping Alliances Need a Watchdog

The European Shippers’ Council (ESC) says that shipping industry needs a global authority to keep Vessel Sharing Alliances (VSA) in check, as they are a risky development for the free market for transportation of goods over sea.

According to the ESC, the global market will be in the hands of four major players, warning that  this will not be good for the clients of the carriers, the shippers, and the consumers in terms of price and quality of service, if competition authorities do not impose strict conditions on the operation of the alliances.

The U.S. Federal Maritime Commission (FMC), through Commissioner Lidinsky, has also acknowledged the potential competition threat the alliances pose, and is supporting the organization of a global summit on competition with competition authorities from US, China and Europe at least. The European Shippers’ Council said it is welcoming the opportunity to deal with this global concern at the correct level with more involved competition authorities.

To prepare the summit, and to be able to promote its position, ESC will meet DG COMP and present its plan for the creation of a monitoring system for alliances. Americans and Asian shippers’ councils will be encouraged to take the same approach towards their national competition authorities.

As an example, the European Shippers’ Council wants to see monthly capacity, actual filling rates and monthly average revenue per TEU tracked by competition watchdogs. The ESC says that a strict monitoring of freight rates modification following capacity changes has to be created, as well as an advance notification system to eliminate last minute cancellation of calls, departures or bookings.

In the end, the ESC would like to see an observatory of the service quality to be settled to avoid that alliances lead to a decrease in transport quality and as a consequence a hurdle to the global trade and its growth potential.

Press Release