Four international liner shipping groups are calling for an extension of the European Union’s consortia block exemption regulation (“BER”) for an additional five years beyond its current 2020 expiration date.
The four trade associations—World Shipping Council (WSC), European Community Shipowners’ Associations (ECSA), International Chamber of Shipping (ICS), and Asian Shipowners’ Association (ASA)—submitted to the European Commission on December 20 their comments of support to have the consortia block exemption in the EU extended. The industry comments emphasized at least four key points behind the call:
- Vessel sharing arrangements are a fundamental part of the structure of the global liner shipping transportation network.
- The consortia BER has since 1995 provided transparent and practical legal guidance to vessel sharing arrangements for international liner shipping services operating from and to EU ports.
- Despite recent mergers in the liner industry, the industry remains unconcentrated and highly competitive, with freight rates at half of their levels twenty years ago.
- In addition to supporting operational efficiency and broader service offerings, the BER helps carriers reduce air emissions and greenhouse gases through higher utilization of vessel space.
John Butler, president and CEO of WSC, said: “The bottom line is that the BER has worked very well for almost 25 years. It sets out clear rules that can be practically applied without the need for extensive legal analysis. This means that carriers can focus on seeking the most efficient transportation solutions without the cost and delay associated with legal self-assessment for these routine operational arrangements.”
Martin Dorsman, secretary general of ECSA, said, “The purely operational agreements covered by the BER foster competition by lowering barriers to entry and enabling carriers to compete on more routes.”
Guy Platten, secretary general of ICS, said: “A factor that is new in this review of the BER is the fact that the IMO has now set concrete goals for greenhouse gas emissions reductions for the international shipping industry. We will need to use every available tool to increase efficiency, and the BER supports vessel sharing that is a key tool for the liner sector to reduce its fuel burn and therefore reduce its emissions.”
Captain Ang Chin Eng, secretary general of ASA, added: “Many Asian economies/countries have legal regimes that treat liner shipping consortia in the same competitive manner as the EU. It is in the interest of international trade that policies and laws are aligned globally at both ends of the trade route which will provide clear guidance for international shipping.”
Last November, the International Transport Forum (ITF) said the alliance structure in container shipping had reduced shippers’ choice and lowered service levels, and called for an end to the EU’s block exemption against forming consortia that the liner shipping industry currently enjoys.
The European Commission reopened in September its investigation into the block exemption which allows carriers to operate alliances on trades that serve the European Union.
Brought into law in 2010 the block exemption is due to expire on April 25, 2020, and the EC has called on carriers, shippers, forwarders, and ports for their opinions.
Photo: Stan Dalone
