Freight News, Sea

Shippers call for more monitoring of ‘unreliable’ alliances

[ March 23, 2015   //   ]

The Global Shippers Forum (GSF) has called for key performance indicators (KPIs) to give customers confidence that ocean shipping alliances can deliver tangible benefits such as reduced costs, competitive ocean rates and improved services for shippers.
Speaking at the ‘Transport Week Conference’ in Gdansk, Poland, GSF secretary general Chris Welsh said KPIs were necessary to sort out the current lack of reliability and predictability of the alliances’ joint operations.

He said: “Such confidence building measures are necessary in view of the concentrated market power of the four main alliances covering the world’s main trade lanes and smaller niche and regional liner markets which are directly or indirectly impacted by the alliances. That confidence and trust will be  withheld so long as alliance members continue to discuss, fix or agree rates or rate guidelines in conference or discussion agreements, such as the Transpacific and Inter-Asia discussion agreements”.
The GSF describes the new alliance agreements as “a new breed of enhanced cooperation agreements in the liner shipping sector that go well beyond traditional consortia or vessel sharing agreements.” While alliance members are competing with each other for cargo and market share, they also have mechanisms for sharing strategic information on costs, future capacity investment decisions, trade lane capacity deployment, port and terminal operations, and potentially even prices and surcharges.
Welsh stated: “The alliance lines leadership should take the ultimate confidence building step of pulling out of all conference and discussion agreements to give assurance that the exchange of sensitive information, including pricing information, on a regular basis within alliances does not lead to abuses of their market power or erect barriers to market entry.
GSF has welcomed the markers laid down by the US FMC and MOFCOM, the Chinese competition authority, with regard to the abortive P3 agreement. The monitoring conditions recommended by GSF and introduced by the FMC to monitor capacity and rates ultimately led to China’s decision to reject the P3, Welsh added.
The GSF is calling on the EU, US, and Chinese regulatory and competition authorities to share monitoring data and information to prevent potential competition abuses.

Welsh concluded: “Shippers understand that we have a shared interest with the liner companies to provide a long-term sustainable framework for investment in liner shipping services and the wider maritime logistics supply chain. Clearly the 2M, G6, CKYHE and Ocean Three leaderships believe that mega-alliances are the answer to a sustainable future for the liner shipping industry.  With that, let us agree a workable and rigorous set of monitoring KPIs that can provide the required level of confidence to customers that alliances will not only deliver service and cost improvements but give reassurance to shippers that they can confidently invest in their maritime and logistics supply chains.”