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NEWS
Two US Congressmen have introduced a Bill that could spell the end for liner shipping conferences in the US, bringing it into line with similar legislation in the EU. Congressmen Oberstar and Cummings’ new Ocean Shipping Reform Bill is intended to eliminate ‘cartel-like’ activity including pricing agreements and discussion agreements in container trades to and from the US. It follows a long campaign by the National Industrial Transportation League, the US equivalent to the British and European shippers’ councils. The Freight Transport Association’s general manager of global and European affairs, Chris Welsh said that while the eventual legislative outcome was hard to predict as the new bill made its way through the US legislature, the fact that it had been tabled by two influential congressmen could lead to it being fast-tracked through the machinery. “The big question is
whether it will be passed before the mid-term elections.” If not, any change in the political map could make its progress less certain. “However, my assessment is that it will move quite fast,” said Mr Welsh. He added that the Federal Maritime Commission also appeared to be in favour of a toughened regime to outlaw unacceptable practices in shipping, and while the FMC had no direct political input, it did have influence. With the EU having already
effectively outlawed conferences in the Europe/US trade, the main effect of the new legislation could be in the US/Asia transpacific trades, the largest remaining market – apart from intra-Asia – still influenced by conferences, Chris Welsh continued. He said that there was evidence that, during the recent downturn, the Transpacific trade had been more affected by cargo rollovers and severe capacity reductions
than Europe/Asia or Europe/US. “Also, the Transpacific carriers met on 19 separate occasions within a single calendar month” - suggesting that the level of inter-carrier activity is much higher than on other major trades. And while the US legislation
will have no direct influence on trades in Asia or, for that matter, Canada, it could “open up the debate” in other countries and possibly spark similar legislation elsewhere, argues Mr Welsh. Dr Andrew Traill at the Shipper’s Voice described the bill as “a very positive step forward”. He added: “The carrier lobby will no doubt be gathering their forces and reserves to try and fight this off or modify the proposals to the point where nothing much really changes.“ However, the bill could spell
“the end of their empire, what with the ending of the block exemption for liner conferences in Europe, a gradual removal of
the European block exemption for consortia and the Argos case challenging the breach of contract by Maersk Line.” He said that matters had been
building up ever since the FMC launched their investigations last Spring following the House Committee hearings in March. “My first thoughts are, however, that this might stand a better chance today because the major deep-sea shipping lines are not US-owned. Senators are often very reluctant to do anything against their own, but quite happy to do so against foreign interests.” Dr Traill predicted that the
Oberstar Bill wiould get a lot of support from shippers’ groups in Europe and Asia, the latter being the last bastion of liner cartel activity. However, even here there were signs of attack from countries such as India and to some extent China, though not, unfortunately, Singapore. Dr Traill believes that the
European Union’s competition policy and legislation will no doubt influence the US to some degre. “Senators would probably want to ensure their shippers have at least the same level of protection from anti- competitive practices as their European counterparts and competitors. Indeed Oberstar actually referred to the EU’s consortia block exemption threshold of 30% market share as ‘a good place to start’ in his proposed bill.” He continued: “The enhanced
role of the FMC is interesting, and something Europe doesn’t have. Here there is no requirement to file contracts and rates or for any form of arbitration or mediation in disputes between carrier and customer. We have to try and monitor things ourselves and raise complaints to the competition authorities when we think there is sufficient evidence for the Commission to investigate. If you trust the
ISSUE 3 2010 Congressmen table ‘conference-killer’ bill
FMC to do this fairly, upholding competition law, then the US approach might be effective. I just feel that in the past, not everyone has thought the FMC to be completely impartial, having rarely bought any shipping line to book over anti- competitive practices despite many arguing the case for the FMC to take action against certain lines.” Indeed there were until quite
recently suggestions that the FMC was becoming redundant as filing requirements became looser. However, “the recent investigations and now this bill seems to have breathed new life into them; so perhaps, the FMC will grab their new and enhanced role with both hands and with renewed vigour.” But Dr Traill warned: “There is
a long way to go on this: a lot of arguments, legal and technical, and some of it may get personal and nasty. I am sure lawyers will be rubbing their hands in glee.”
Air France-KLM sees little Christmas cheer
Europe’s air cargo industry could be in for a disappointing end of year peak season, with inbound flows from key Asia Pacific sources well below the levels anticipated in many quarters just a few months ago. Air France-KLM Cargo senior vice president Jean Charles Foucault told a press briefing in Paris at the end of September that pre-summer, shippers and forwarders had suggested the second half of the year could see a “huge” peak season. However, “looking at the situation today, the progress of the third quarter peak season is at a lower level than previously anticipated. Also, the start
of that season looks to be coming later,” he stated. “When you look at the figures for
August and September, the volumes are less than we were thinking of a few months ago. Normally, the Asian peak season boom is already under way at this time, especially when you look at the key markets of China and Hong Kong.” Instead, AF-KL’s own August Asia
Pacific cargo traffic, for example, was down 1.7% on August 2009 at 388 million RTKs (revenue tonne kilometres). This year’s August traffic figure was also below the July number of 407 million RTKs, which was itself
3% down on July 2009. Foucault warned that European
carriers could also face increased competition from their Asian counterparts. “Last year we had the benefit of
Asian carriers focussing more on the transpacific. That focus has shifted a bit this year to Europe. So they may come in with more capacity between Asia and Europe than they offered last year.” On the wider subject of capacity, chairman of AF-KL Cargo Michael Wisbrun, said his focus was now on using bellyhold space available on the group’s passenger fleet of 142
wide-bodied aircraft and on its 16 B747 combis, with the operational fleet of 14 freighters (mix of B777Fs, B747-400s and MD11s) offering “complementary” capacity. Wisbrun said AF-KL Cargo had
cut its total capacity by 19% since 2007/08. Much of that reduction had involved freighter capacity which had been cut by 41% over that period. Combi space had been reduced by 20% but bellyhold capacity had actually increased by 6%. The net result was that 66% of AF-KL Cargo’s total capacity was now bellyhold/ combi space, compared with 54% in 2007/08.
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