Some shipowners have announced that they will cease to provide services to freight forwarders with a named account as of January 1, 2022. With this decision, which has stopped serving some of its customer base, it is aimed to prevent logistics service providers from meeting their needs in the supply chain with freight forwarders, and to do business directly with some shipowners.
Although the decision of these shipowners to offer integrated services to real shippers is not new, their commercial decision is a clear step forward for freight forwarders. Freight organizers have real concerns that they will not find room for their cargo unless they enter the less favorable spot market. These shipowners not only reject contracts from freight forwarders; they are also taking steps to do business with customers of freight forwarders that they stopped working with.
Commenting on this development, CLECAT Managing Director Nicolette van der Jagt said: “We are examining whether this discriminatory initiative complies with EU competition law. Shipowners and freight forwarders do not operate on equal terms within the framework of the Consortia Block Exemption Regulation (CBER), which is part of a ship-sharing agreement, which offers shipowners the opportunity to share a wide range of information. Some of this information is commercially sensitive information. We have called for urgent replacement of CBER with more modern tools to address competitive issues. The Commission has so far failed to consider the level of digitization of carriers, including the exchange of information between carriers and within vertically integrated shipping companies. The increasing prevalence of logistics solutions offered by carriers with access to digital information tools and platforms is invalidating existing concepts used by European competition authorities.
Van der Jagt continued: “This situation must be evaluated in light of the damage done to many stakeholders in these last two years, when the stability and reliability of transport services have been most shaken, freight prices continue to rise and even reach an all-time high. It is commendable that freight forwarders and NVOCCs, acting as contract carriers providing value-added services to customers from door to door, continue to act with optimal solutions for the shipment of goods. This is best achieved by competition in the market. Today, NVOCC has few options left for the shipping leg of its services, as the tripartite alliance oligopoly controls the main trade routes in the market.
As shipowners strive to be integrators of container logistics, we warn that we may face unexpected consequences in a market where several players manage complete supply chains. The current crisis has shown us that prices and credibility can be shaken if control is only in the hands of a few players in the market. This should serve as a warning to the European Commission, which has so far only facilitated carriers' strategic choices for vertical integration and co-ordination of carriers.
Today, end customers – namely European consumers – are also faced with this situation, as the unprecedented increase in the cost of transport goods and delays in container delivery are causing serious problems for European importers and exporters. Meanwhile, carriers have made billions in profits by taking advantage of the optional, vertically integrated government aid and taxation opportunities offered during the pandemic. CLECAT reiterates that freight forwarders no longer compete in fair competition with carriers. We recommend that the European Commission rebalance its audit account and stop special regimes for carriers that create market distortions in the shipping industry.”