FIATA has come out punching on behalf of freight forwarders, claiming the shipping lines’ vertical ambitions are “violent” competitive moves.
At a “Reconnect” meeting yesterday, former president, now SVP, Ivan Petrov alleged that some shipping lines were forcing customers to buy additional services – a claim raised by many shippers and forwarders in recent weeks.
“Vertical integration is being done by the majority of the big 10 carriers, which have a dominant position. This is drastic violence on the competitive edge of the market,” he said.
“They have seen a drastic increase in profit and a drastic decrease in service levels, and have entered into niche markets such as last-mile. They are no longer concentrating on port-to-port, and they have done that on purpose.”
Claiming some customers had been denied capacity if they did not also buy haulage or other services, Mr Petrov said the lines were “using lots of different tools” which were having a “negative impact on the industry”.
FIATA SVP Jens Roemer went further: while noting “competition is good”, he said it had to be on a level playing field.
“The lines are protected through alliances and the block exemption regulation,” he explained and, calling the market an oligopoly, he pointed to the extensive tax advantages shipping lines had.
“They have used those funds to invest in the supply chain and compete with us – but we don’t have those tax advantages.”
He urged the authorities to investigate the way some lines are said to be forcing customers to take more of their services, comparing it to numerous lawsuits against Google which allege the search giant has promoted its own services in a monopolistic way.
“They are such dominant lines, with their own haulage services, customer brokerages etc, that our members have concluded that you may not get space or a container on a port-to-port service if you don’t also get haulage. Lines are supporting their own services.”
Mr Petrov added: “The main problem is choice and competition. Ten shipping lines, in three alliances, control world container trade. What has that done to the business, and do we want to limit them from door-to-door services?
“Forwarders offer value-added services throughout the supply chain. We have trained people; we are specialists, and if they are giving an unfair advantage to their merchant services, the choice is going to be less.”
FIATA said it was looking at partnerships to combat the lines’ aggression and noted “there is a big difference between the approaches of the US FMC and European Commission”.
Mr Roemer said: “The UN has established that 1.5% of global inflation is due to increased freight rates – and that has hit a nerve in the US.” And he pointed to investigations into detention and demurrage by the US authorities.
“They established that D&D practices are unfair. The practices are global, so there should be a global conclusion which is adopted in Europe. But the EC seems less proactive.
“But the block exemption regulation is on the table in two years – we think the conclusions might be different this time.”
Credit The Loadstar by Alex Lennane