Press Release
Global Economy Demands End to Shipping Cartels
23 March 2000
Addressing the Containerisation International 3rd Annual Conference, European Shippers' Council's Secretary, Chris Welsh highlighted the desperate need for reform of the liner shipping industry in order to address the needs of shippers in the rapidly developing global economy.
Mr Welsh said 'Since the late 1970s, and earlier, liner conferences have been constant thorns in the side of shippers. They have habitually and regularly disrupted the normal functioning of the market, caused serious damage to customer-supplier relationships and in a number of cases have eliminated effective competition and abused their dominant position in the market. Moreover, the liner conference system today is a particularly inappropriate form of market organisation, one that not only stifles innovation, but also is a serious impediment to the necessary restructuring of the liner shipping industry.
'A series of legal cases, pursued by ESC and others, relating to inland price fixing, service contracts, capacity management, abuse of a dominant position and collective market dominance have led to a number of legal reforms.
'These decisions confirm the right of shippers to negotiate individual and confidential service contracts. Indeed, today this has become standard business practice in some of the world's most important routes, including the Trans Atlantic, Far East and Trans Pacific trades. In addition to this, inland price fixing has been prohibited in Europe and the Commission has ruled that so-called "tolerated outsider" agreements, and artificial non-utilisation capacity management is unlawful. These are considerable successes for shippers, which will have a significant bearing on the future operation of the market.
'Furthermore, the increasing use of individual and confidential service contracts as opposed to rigid adherence to tariff rates makes the carriers arguments for retention of hard -core price fixing cartels look increasingly spurious.
'We believe that it is now up to the carriers to fully justify why they need to retain their unique privilege of hard-core price cartels in today's global and fast changing economy which highlights:
- The increasing importance of supply chain logistics
- International competitiveness in a global economy
- Global sourcing/procurement
- Global benchmarking/best practice and key performance indicator
- The implications of e business
- E-buying with real time pricing and transparency
'These developments make it more than clear that we can no longer tolerate nineteenth century business practices in the rapidly new developing global economy.'
For further information contact: Nicolette van der Jagt, Secretary General of the ESC - Brussels 00 322 230 2113
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