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Industry group rallies against anti-competitive antics among alliances
来源： 编辑：编辑部 发布：2018/11/20 13:52:24
IN light of the longer-term trend towards the removal of block exemptions in the shipping industry, the International Transport Forum is urging the European Commission to allow the EU Consortia Block Exemption Regulation to expire in April 2020, as currently scheduled, rather than extend it.
In its report entitled, 'The Impact of Alliances in Container Shipping,' the ITF said a repeal of block exemptions is unlikely to result in the termination of current and future alliances, as these could still be authorised under competition law on a case by case basis. However, it would ensure greater scrutiny of individual alliances and thus more effectively deter any anti-competitive conduct in the sector.
The report highlighted the link between the three global shipping alliances - 2M, Ocean and THE Alliance - and overcapacity, claiming that without alliances certain carriers would not have been able to acquire mega ships, the ordering of which has further exacerbated overcapacity.
Whereas early generations of global alliances that emerged in the mid-1990s provided a vehicle for cooperation between smaller carriers, alliances nowadays are tools for the largest container lines. These three alliances represent 80 per cent of overall container trade and operate 95 per cent of the total ship capacity on East-West trade lanes.
The report goes on to say that the alliances have contributed to lower service frequencies, fewer direct port-to-port connections, declining schedule reliability and longer waiting times. This has increased total transport times and delivery uncertainty for various shippers, leading to higher inventory and buffer costs.
Moreover, alliances have proved to be inherently unstable: considering that all major carriers are in alliances, changes in one alliance can have an impact on the whole sector, the report noted.
Alliances contribute to the concentration of port networks and bigger cargo shifts from one port to another when alliances change port networks. Within ports, the buying power of the alliance carriers can create destructive competition between terminal operators and between other port service providers such as towage companies.
The report said that this can lower the rates of return on investment for the port industry, and results in the decline of smaller container ports and the disappearance of smaller independent terminal operators as well as towage companies.
It said that a particular concern is that alliances frequently exert strong pressure for publicly funded infrastructure upgrades to be undertaken to support the use of mega ships, while these expenditures often prove to be uneconomic, either due to shifting demand for port services or the power exercised by the alliances.
Although overcapacity in the liner sector has lowered freight rates, these cost savings are partly offset by a number of additional costs for shippers. Moreover, by limiting shipping options, alliances have frustrated the risk diversification strategies of shippers and freight forwarders.
Alliances could raise competition concerns in what has become a concentrated market. The top four carriers accounted for 60 per cent of the global container shipping market in 2018. The market share of the biggest carrier (19 per cent) is larger than the market share of any global liner alliance before 2012.
Global alliances give more market power to carriers and have several implications, the report emphasises. First, they represent barriers to entry on East-West trades: only the largest companies would be able to compete on price for Asia-Europe services outside an alliance structure.
Second, alliances could function as vehicles for collusion between carriers, as they provide carriers with in-depth insights on the cost structures of their competitors. Thirdly, alliances give very considerable bargaining power - "monopsony power" - to carriers in regards to ports and terminals.
The result can be declining rates for port services, carriers requesting additional public infrastructure and vertical integration by carriers, in particular in terminal operations.
This could raise competition concerns if dedicated terminals exclude other carriers and if carriers' terminal investments raise entry costs that make container shipping a less contestable market, the report warned.
In its report entitled, 'The Impact of Alliances in Container Shipping,' the ITF said a repeal of block exemptions is unlikely to result in the termination of current and future alliances, as these could still be authorised under competition law on a case by case basis. However, it would ensure greater scrutiny of individual alliances and thus more effectively deter any anti-competitive conduct in the sector.
The report highlighted the link between the three global shipping alliances - 2M, Ocean and THE Alliance - and overcapacity, claiming that without alliances certain carriers would not have been able to acquire mega ships, the ordering of which has further exacerbated overcapacity.
Whereas early generations of global alliances that emerged in the mid-1990s provided a vehicle for cooperation between smaller carriers, alliances nowadays are tools for the largest container lines. These three alliances represent 80 per cent of overall container trade and operate 95 per cent of the total ship capacity on East-West trade lanes.
The report goes on to say that the alliances have contributed to lower service frequencies, fewer direct port-to-port connections, declining schedule reliability and longer waiting times. This has increased total transport times and delivery uncertainty for various shippers, leading to higher inventory and buffer costs.
Moreover, alliances have proved to be inherently unstable: considering that all major carriers are in alliances, changes in one alliance can have an impact on the whole sector, the report noted.
Alliances contribute to the concentration of port networks and bigger cargo shifts from one port to another when alliances change port networks. Within ports, the buying power of the alliance carriers can create destructive competition between terminal operators and between other port service providers such as towage companies.
The report said that this can lower the rates of return on investment for the port industry, and results in the decline of smaller container ports and the disappearance of smaller independent terminal operators as well as towage companies.
It said that a particular concern is that alliances frequently exert strong pressure for publicly funded infrastructure upgrades to be undertaken to support the use of mega ships, while these expenditures often prove to be uneconomic, either due to shifting demand for port services or the power exercised by the alliances.
Although overcapacity in the liner sector has lowered freight rates, these cost savings are partly offset by a number of additional costs for shippers. Moreover, by limiting shipping options, alliances have frustrated the risk diversification strategies of shippers and freight forwarders.
Alliances could raise competition concerns in what has become a concentrated market. The top four carriers accounted for 60 per cent of the global container shipping market in 2018. The market share of the biggest carrier (19 per cent) is larger than the market share of any global liner alliance before 2012.
Global alliances give more market power to carriers and have several implications, the report emphasises. First, they represent barriers to entry on East-West trades: only the largest companies would be able to compete on price for Asia-Europe services outside an alliance structure.
Second, alliances could function as vehicles for collusion between carriers, as they provide carriers with in-depth insights on the cost structures of their competitors. Thirdly, alliances give very considerable bargaining power - "monopsony power" - to carriers in regards to ports and terminals.
The result can be declining rates for port services, carriers requesting additional public infrastructure and vertical integration by carriers, in particular in terminal operations.
This could raise competition concerns if dedicated terminals exclude other carriers and if carriers' terminal investments raise entry costs that make container shipping a less contestable market, the report warned.