Asian shippers cry foul on charges
ASIAN shippers have hit out at unfair practices of shipping lines and are seeking for substantial changes in liner conferences. According to the Federation of Asean Shippers' Councils (FASC), the system as currently constituted is adverse to the interest and needs of industry and trade. At the FASC's 27th annual general meeting in Singapore last week, the members pressed that reforms need to be enacted to create true economic partnership between shippers and carriers that results in a market driven environment. “The liner conference system has been the largest single obstacle to a normal relationship between shipping lines and their customers, the shippers,” said FASC head John Lu. In the liner conference system, two or more shipping lines operating a service in common between designated locations, agree on a set of freight rates for shippers and each line charges the same as the others. Most shippers see conferences as price-fixing cartels. At the meeting, FASC made a decision to launch a larger Asian Shippers' Council taking in the national shippers' bodies of the whole region in a single entity. The issues discussed at the meeting include ocean freight markets, the terminal handling charges and other surcharges, anti-trust laws, maritime security and free trade agreements in East Asia . The members agreed to continue pursuing the issue through their respective governments and international organisations like the Federation of International Freight Forwarders, the International Chamber of Commerce, World Trade Organisation and United Nations Conference on Trade and Development. Shippers have always complained that they are squeezed by port operators and the shipping lines through terminal handling charges (THCs), alleging that any fall in charges to the lines are not passed on to them, while hikes are unfairly or disproportionately passed on to shippers. Explaining the need for concerted action to protect Asia's shippers, Lu said that in Europe the European Union Competition Law, and in the US , the Ocean Shipping Reform Act, provide a regulatory framework and a balance to the anti-trust immunity environment. “But unfortunately in Asia, except for Japan , this element is largely missing,” Lu said, adding that as a result “Asian shippers are subject to the onslaught of monopolistic practices of liner conferences.” He urged the liner industry to “make changes to realign themselves in this globalised free market environment towards fair business practices, and be like all other businesses where relationship is based on mutual respect and collaboration”. Shippers are confronted with the issues of increasing cost of transportation as freight rates keep rising, and maritime security concerns. But while the Asian shippers have expressed their concerns about liner conferences' 'price fixing', there have been some moves recently suggesting that liner shipping could lose its exemptions from EU competition law entirely. The European Commission is likely to abolish the bloc exemption to anti-cartel laws currently enjoyed by liner shipping, but will continue to allow groups of lines to act together in consortiums. At present, liner groupings, under whatever name, still exist but are under increasing threat. Their influence varies considerably between trades. Major container carrier Maersk Sealand, the liner arm of Danish shipping giant AP Moller-Maersk, decided to pull out of the Transpacific Stabilisation Agreement (TSA) recently, said Singapore 's Shipping Times . While TSA is not seen as a conference, Maersk Sealand's move would have dealt a blow to the liner conference system.
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