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European Freight Forwarders Call on EU to Investigate Container Lines

calls for EU to investigate container shipping lines

Published Feb 21, 2022 6:25 PM by The Maritime Executive

Calls are continuing to build for regulators to investigate the business practices of the container shipping industry, with the association representing European freight forwarders becoming the latest to demand that the EU Competition regulators to become involved. Accusing the ocean shipping carriers of profiteering and taking steps to drive out independent freight forwarders, the association writes in a letter to the EU Commission saying that the practices are disadvantaging shippers and end-consumers because of restricted choice of services and higher rates.

Addressing EU Commissioner for Competition Margrethe Vestager, the European Association for Forwarding, Transport, Logistics, and Customs Service (CLECAT) calls on the Commission to urgently investigate under the EU competition rules the impact of issues including vertical integration, consolidation, control of data, and the resulting market dominance. In particular, they cite the forecasts of over $200 billion in profits for industry, saying the EU needs to become involved to remove unfair and discriminatory rules.

CLECAT cites the “massive freight rate hikes over the last 18 months,” which they contend “have led to damaging inflation and increases in the EU’s costs of living.” In their letter to the commissioner, they said that carriers are using their capacity management strategies resulting in profiteering and permitting the carriers to acquire further market power to vertically integrate, increase rates, and drive out independent freight forwarders in the downstream market. 

They are calling on the European Commission to urgently use its powers of investigation to establish the degree of concentration, consolidation, coordination, and cartelization in the upstream container liner shipping services markets serving the EU, and the downstream markets for freight forwarding services

“CLECAT notes that the combination of these factors has enabled the carriers to cherry-pick the highest-volume shippers for longer-term contracts and relegate the others to the spot market where they will pay multiples of the rates offered to the favored few,” writes the organization.

“We regret that the Commission has so far ignored the important messages from many stakeholders who depend on a healthy maritime container logistics supply chain,” says Nicolette van der Jagt, Director General of CLECAT. “We continue to call for new rules of the game, with more governance and oversight of carriers in accordance with normal competition rules,” she wrote saying it was critical to prevent one party from having an unfair advantage or trying to use an advantage to drive the other out of business.

Similar calls have come from many other groups, including freight forwarders in the UK and multiple organizations in the United States. In addition to the individual investigations, five competition authorities, representing the UK, U.S., Canada, Australia, and New Zealand announced that they will be working together to look at the business practices of the carriers and freight rates. They plan to share information and collaborate to prevent cartels and other illegal business practices that could harm shippers, global trade, and the economy.