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BIFA demands shipping probe

[ January 5, 2022   //   ]

The British International Freight Association says it is “joining the chorus of voices” that are calling for an investigation into the activities of container shipping lines.

It has written to the UK government  asking it to investigate the state of competition within the current deep sea container shipping market, saying that its members are concerned that practices by the principal lines, as well as easements and exemptions provided to them under competition law, are distorting the market.

In a letter to parliamentary under secretary of state at the Department for Transport, Robert Courts MP, BIFA director general Robert Keen  warns that commercial power is becoming increasingly concentrated, resulting in diminished market choice and competition, and distorted market conditions.

Robert Keen says: “BIFA members fully accept that a free market economy is open to all, but are increasingly concerned that the activities of the container shipping lines, and the exemptions from legislation from which they benefit, are distorting the operations of that market to the shipping lines’ advantage, whilst adversely and unfairly affecting their customers, especially freight forwarders and SME businesses. During a period that has seen EU block exemption regulations carried forward into UK law, there has been huge market consolidation.

“In 2015, there were 27 major container shipping lines carrying global containerised trade, with the largest having a 15.3% market share. Today, there are 15 shipping lines, organised into three major alliances, with some analysts observing that the market share of a single alliance on certain key routes could be over 40%.”

He added that the Covid pandemic has accelerated the process, “which has also contributed to dreadful service levels, and hugely inflated rates, with carriers allocating vessels to the most profitable routes with little regard to the needs of their customers. Drewry recently issued a profit forecast of more than USD150 billion for 2021 for the main container shipping lines for which financial results are available.

“To put that into perspective, this is more than has been achieved in the previous 20 years combined, and many BIFA members consider it to be a case of blatant profiteering.”

BIFA is joining a growing number of organisations, including CLECAT and FIATA, the US Federal Maritime Commission, and the Australian Productivity Commission, in calling for governments to investigate shipping lines to see whether they are in breach of competition law.

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