The major container shipping lines have offered to improve the transparency of freight prices in response to concerns raised by the European Commission.
Future price announcements would include five main elements of the total price: base rate, bunker charges, security charges, terminal handling charges and peak season charges, under the scheme proposed by the 15 lines.
The commission disapproves of the current system, known as General Rate Increases (GRI), which are published up to five weeks before the implementation date and don’t indicate the fixed final price for the service concerned – only the amount of the increase in US dollars.
It argues that these General Rate Increase announcements may not provide full information on new prices to customers but merely allow carriers to explore each other’s pricing intentions and coordinate their behaviour. This breaches EU competition law. It is now seeking feedback on the commitments offered by the shipping lines.
The move has been welcomed by the Freight Transport Association (FTA) and the British Shippers’ Council which have been campaigning on the issue for more than five years.
Chris Welsh, the FTA director of global and European policy, said: “We welcome the Commission bringing this important case on liner shipping prices to a satisfactory close. As one of the original complainants, FTA will respond to the market test now that the Commission has published its Notice.”
The shipping lines are: China Shipping (China), CMA CGM (France), COSCO (China), Evergreen (Taiwan), Hamburg Süd (Germany), Hanjin (South Korea), Hapag Lloyd (Germany), HMM (South Korea), Maersk (Denmark), MOL (Japan), MSC (Switzerland), NYK (Japan), OOCL (Hong Kong), UASC (UAE) and ZIM (Israel).
They have made five key commitments:
- The carriers will stop publishing and communicating General Rate Increase announcements, i.e., changes to prices expressed solely as an amount or percentage of the change.
- The price figures that the carriers announce will benefit from further transparency and include at least the five main elements of the total price (base rate, bunker charges, security charges, terminal handling charges and peak season charges if applicable).
- Any such future announcements will be binding on the carriers as maximum prices for the announced period of validity (but carriers will remain free to offer prices below these ceilings).
- Price announcements will not be made more than 31 days before their entry into force, which is usually when customers start booking in significant volumes.
- The commitments proposed by the parties include two exceptions in situations that would be unlikely to give rise to competition concerns. Namely, the commitments will not apply to: (i) communications with purchasers who on that date have an existing rate agreement in force on the route to which the communication refers and (ii) communications during bilateral negotiations or communications tailored to the needs of specific identified purchasers.
The commitments would apply for a period of three years.
Interested parties have one month to comment on the proposals.
Click here to visit the case web site:
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39850
