Ending rate fixing in shipping had little impact, study says
Wednesday, 22 February 2012 | 11:00
The EU's 2006 decision to repeal the exemption the liner industry enjoyed from competition rules has had little impact on shipping, a new study from the US Federal Maritime Commission (FMC) has found. While some thought the repeal, which took effect in October 2008, would reduce shipping rates in EU trades, the FMC could only detect "trivial" differences in revenues between comparable trade routes. For example, while average revenues per 20-foot equivalent unit for shipments from the Far East to US declined by US$150 between 2008 and 2010, they declined by US$141 for Far East-EU trade. Moreover, the FMC could find "no persuasive evidence that the repeal of the liner conference block exemption either improved or hurt service quality". But the repeal does appear to have caused an increase in the volatility of rates, a small increase in market concentration and a decline in market share stability, the FMC found.
The FMC wanted to examine the repeal's impact because, unlike in the EU, carrier rate discussion agreements are still allowed in the US. There has been debate over whether the EU's ending of anti-trust immunity would give European shippers a competitive edge over their US counterparts. Indeed, the European Commission moved to repeal the exemption because it believed liner conferences were causing harm to shippers by reducing their bargaining power. But the study concludes that perhaps that harm was "less substantial than previously believed". The FMC's job in assessing the impact was complicated, it notes, by the 2009 global recession, which "produced the largest decline in trade volumes in liner history".
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