As announced previously in several publications, ESC called for the meeting with the relevant European authorities, DG Competition, to discuss the container capacity crunch, the connection of this crunch with the Alliances and their impact on competition. This meeting took place on 30th June 2017.
ESC explained the effects of the capacity crunch based on the report of the ESC Observatory exercise. Indeed, a significant number of shippers reported in summary the following: breached contracts, suggestions to overbook, delayed sailings, a lack of preparations by the Alliances, absence of contingency plans, and last but not least, some prices doubled temporarily.
In the end, traders and manufacturers suffered from seriously disrupted operations and increased costs through both, higher internal costs and freight rates. On top of that, some industries were forced to sell their products at a loss or were prevented from selling at all.
These are reasons enough to express their concerns about the correlation between the market share of the Alliances, the global negative effect on operations by that crunch – although temporary, the permanently increased price levels, and the outcome of all that on shippers. At the same time ESC openly questioned the effect, or a lack of effect, of the current Block exemption regulation.
DG COMP listened with interest and welcomed the information. The information will be made part of the evaluation of the market situation and the BER, that is due for review in 2020. The review process will start soon in 2018. It was agreed to organize regular meetings with DG COMP during which they will be provided with up-to-date information.
For more information about the results of the Observatory exercise, please contact email@example.com.