Expensive container freight rates: shippers and shippers ask the European antitrust to intervene
European shippers and freight forwarders have returned to alert the European Commission on current practices implemented by shipowners active in liner container transport because the supply chains of goods are undergoing ever greater alterations. This was announced by Clecat explaining that the associations will meet with representatives of Brussels in the first weeks of 2021 to demonstrate the damage that according to them the behavior of the carriers is causing the growth of trade in a period of economic recession.
In a joint letter to the Antitrust Directorate of the European Commission, the European Freight Forwarders ‘Association (Clecat) and the European Shippers’ Council (Esc), respectively the continental association of freight forwarders and shippers, informed the Commission on matters concerning the violation of existing contracts, the insertion of unreasonable conditions for the acceptance of reservations and the application of fares much higher than those agreed in the contracts.
“This situation particularly affects small European companies with limited financial reserves” underline the associations. “An eloquent example is the fact that a French company producing electric bicycles is in danger of going bankrupt because it does not receive spare parts from Asia. Due to delays and the lack of sufficient space in the hold, combined with the increase in tariffs, this start-up is suffering losses and may not survive for the foreseeable future by not being able to finish its products for sale. The negative consequences of carrier practices are felt equally by many larger companies, including retail, fashion, automotive, cosmetics and IT businesses”.
According to the shippers’ complaint, the shipping carriers have reserved the right to change the tariffs whenever they deem it appropriate, despite the specific freight rates and charges agreed. “Shipping companies continue to increase their rates with surcharges, general freight increases, etc. Likewise, shippers and shippers are faced with the problem of refused bookings and postponed loads in cases where carriers find it more profitable to accept shipments with higher rates for a particular route “reads Clecat’s note again. and Esc. Among the practices considered “unacceptable” there is also that for which shippers are refused reservations already confirmed previously for the sole purpose of obtaining new bookings at significantly higher spot rates.
“The disruption of the supply chain of goods due to the unprecedented number of blank sailing (up to 30% on some trades), combined with the lack of reliability of services (only 50% of the ships were punctual in the last year), has led to the current shortage of empty containers ”added shipping line customers. According to which “the carriers are trying to send the containers back to China as quickly as possible simply because there is a need for equipment in order to reap the profits are extremely interesting. But this in the meantime has led to a domino effect as there is a general shortage of equipment for European exports “.
A dog that bites its tail because this choice forces shippers and shippers to have to face extra costs even in exports from the old continent, including the “surcharges for equipment imbalance” that the same shipping carriers help to generate for their own convenience. “If shipping companies decide to send empty containers back to China for commercial reasons, the choice of applying an equipment imbalance surcharge is questionable,” note Clecat and Esc.
As reported in recent days by SHIPPING ITALY in the first months of 2021, the growth trend of freight rates for the transport of containers by sea continued unabated.
Finally, the communication sent to Brussels once again calls into question the Block Exemption Regulations granted to shipowning consortia. “Last year – we read – shippers, shippers, terminal operators and other operators in the maritime supply chain expressed their dissatisfaction with the decision of the European Commission to once again extend the exemption regulation (from the Antitrust, ed) for the category of scheduled shipping carriers. The agreements of the alliances authorize the carriers to collectively agree on blank sailing “.
In conclusion, the shippers’ complaint is this: “The current lack of capacity has allowed carriers to significantly increase their rates on the spot market. Carriers’ unreasonable practices with regards to container equipment, tariffs, demurrage and detention charges pose a serious risk to Europe’s economic resilience. Esc and Clecat, whose members have been particularly affected by the unilateral changes in the rates and services of the carriers, call on the European Commission to take actions similar to those of the competent authorities in other parts of the world.”