Shippers argue inter-alliance shared services markets are concentrated
The Global Shippers Forum has entered the debate on the level of competition versus concentration in global shipping markets by arguing on behalf of importers and exporters of freight that markets are more concentrated than current assessments by regulators. . Working with transport economists from MDS Transmodal (MDST), they advocate for a new way of analyzing markets to consider shared services within the framework of inter-alliance agreements that go beyond the three major alliances that made the purpose of regulators.
“Current measures of competitiveness in the global liner shipping market are incomplete and therefore inaccurate and do not fully take into account the degree of cooperation between carriers which results in a more highly concentrated industry, to the serious detriment of shippers in the world,” the group wrote. in their analysis of freight carrier operations.
The level of competition in the markets has come under scrutiny from regulators in many parts of the world. South Korea’s Fair Trade Commission, for example, has accused several carriers of collusion and price-fixing, arguing that in addition to alliances, carriers intimidate other carriers into honoring their agreements. President Joe Biden lambasted the three alliances this year, citing rapid growth in their market share, noting that from 1996 to 2011 the alliances operated about 30% of global container shipping compared to today, where they control 80% of the world’s container ship capacity and 95%. east-west commercial lines. He ordered the Federal Maritime Commission and the Department of Justice to work together to apply US antitrust rules while international antitrust regulators have also agreed to share information seeking market dominance.
However, the Federal Shipping Commission, in its factual investigation, concluded that markets remained below the concentration threshold, a point supported by the World Shipping Council which represents carriers. WSC points out that there are nine major lines carrying containers while claiming that there are thirteen other ocean liner companies which, in 2022, operated more than 30% of crossings from Asia to the United States.
“Competition authorities have so far relied on traditional but incomplete tools to assess the level of concentration between trades,” says the analysis by the Global Shippers Forum (GSF) and MDST. They write that the current analysis fails to consider the full extent of cooperation between shipping lines through inter-alliance agreements permitted under the Block Exemption and other immunity provisions. trust. When the analysis is modified to account for these shared services, they argue that the measures exceed the accepted threshold at which an industry is considered highly concentrated.
“This groundbreaking analysis lays bare the degree of dominance that many shipping companies actually have over major global trades,” comments GSF Director James Hookham. “Current measures of market concentration only see part of the picture. Competition authorities should urgently review their competition measures to reflect the reality of the container shipping market.
According to GSF, the absence or reduction of levels of competition leads directly to poor quality of service for shippers. They cite examples such as the drop in the number of stopovers made compared to the number planned. They say it has fallen to 68%, which is the lowest level recorded since their analysis began in 2020. According to them, shippers are suffering further export delays due to the loss of capacity. MDST adds that its analysis shows that the number of missed calls continues to increase while schedule reliability stabilized at industry lows according to separate Sea-Intelligence analysis.
GSF urges the FMC and all other competition authorities to use a modified measure based on alternative indicators that better reflect the degree of cooperation by lines by including agreements under which lines from different alliances operate shared services to understand the real experience of shippers in the markets.