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EU pricing rules not enough says shipper group

BRUSSELS/TUNBRIDGE WELLS, UK: September 19, 2016. The Global Shippers' Forum (GSF) says new EU pricing rules for ocean container lines, due to come into force in December this year, should apply globally in order to increase price transparency and prevent uncompetitive behavior.

The GSF is referring to the European Commission's adoption in July this year a decision by 14 carriers to cease publishing General Rate Increases (GRI) to "reduce the likelihood of coordinating prices". The original agreement with the Commission also included Hanjin.

The Commission was prompted by concerns that GRI announcements do not provide full information on new prices to shippers but merely allow carriers to be aware of each other's pricing intentions, thereby making it possible to coordinate their behavior.

Maersk ChinaCommenting on the agreement, Danish politician and EU competition enforcer Margrethe Vestager said: "Container shipping accounts for the vast majority of the non-bulk freight carried by sea to and from Europe. Competitive shipping services are therefore essential for European companies and for the EU's economy as a whole. The commitments offered by [the] carriers will make prices for these services more transparent and increase competition."

In addition to a putting a stop to GRI announcements, the box lines have agreed to publish rates that include base rate, bunker charges, security charges, terminal handling charges and peak season charges; that they can go lower than the published price, but not higher; and price changes will not be made more than 31 days prior to coming into force.

The container carriers, CMA CGM, COSCO, Evergreen, Hamburg Süd, Hapag Lloyd, HMM, Maersk, MOL, MSC, NYK, OOCL, UASC, and ZIM, have also agreed the new arrangement doesn't apply to existing shipper contracts, and is legally binding for a period of three years beginning December 07, 2016.

However Alex Veitch, head of Policy at the GSF, said the deal doesn't go far enough: "If price signaling isn't a significant issue then there should be no problem adopting these rules globally, thereby eliminating any possibility of coordinated price increases. Pricing practices need to be completely revised worldwide to bring shipping in line with other modern business practices," he said.

Veitch noted the growth of carrier alliances was also of concern as it had led to greater market concentration, with the top five liner companies accounting for almost 60 percent market share.

"GSF accepts that there are arguments in favor of vessel sharing agreements in terms of efficiency, but it's important to ensure that it is not at the expense of choice and diversity of service," he added.

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