EUROPEAN shipper and forwarder groups are urging regulators to investigate container carrier practices that they say have disrupted supply chains, but admit there is little room for immediate action due to the structure of the European Commission (EC).
In a joint letter to the Competition Directorate of the European Commission, the European Freight Forwarders Association (CLECAT) and the European Shippers' Council (ESC), called for competition authorities to intervene, accusing carriers of violating existing contracts, establishing unreasonable container booking conditions, and unilaterally setting rates "far in excess of those agreed in contracts."
A spokesperson for the European Commission told IHS Media that it had received the letter and would respond "in due course," adding that the commission was aware of investigations being conducted in some jurisdictions into liner shipping practices.
"The European Commission will continue monitoring the developments in the sector of liner shipping," she said.
But Nicolette van der Jagt, CLECAT's director general, acknowledged that even if the EC did take action, its ability to intervene was limited.
"In our letter to the EC, we referred to the investigation of the US Federal Maritime Commission [FMC], and also noted that we recognise that the US regulatory regime is different from the European regime, and that the EU does not have the same instruments and resources as the US at its disposal," Ms van der Jagt said.
While the EC is the executive branch of the European Union, the FMC is an independent federal agency tasked with monitoring and regulating the ocean container shipping system for the benefit of US exporters, importers, and consumers.
The FMC has shown a willingness in recent years to launch investigative probes, and although it doesn't regulate rates, it has issued warnings to carriers when it sees behaviour potentially violating the crux of the Shipping Act of 1984 in that there's a so-called unreasonable decrease in service and/or unreasonable increase in cost.
"However, when freight rates are rising by an average of 500 per cent within weeks, and when firm contracts between carriers and their customers are being broken unilaterally, we believe that Directorate General for Competition [DG Comp] should take the opportunity to use the existing tools at its disposal to adequately respond to the current situation," Ms van der Jagt said.
Meanwhile, global regulators have increased their scrutiny of container lines. The FMC in November increased its monitoring of the three major global shipping alliances, requiring them to provide carrier-specific US trade data monthly rather than quarterly.
South Korean authorities on November 12 warned carriers not to prioritise higher-paying Chinese exports, and Chinese regulators on September 11 strongly suggested that carriers inject more capacity and less aggressively raise rates.