Shippers exporting goods to Asia have experienced a large drop in available slots for containers with almost every shipping line, according to the European Shippers’ Council.
The European Shippers’ Council (ESC) said Monday that its members have seen a “huge booking crunch” that is disrupting their supply chains.
“Many shippers who regularly export goods to Asia have been facing a large drop of available slots for containers on almost every shipping line,” the ESC said. “The main reason given by carriers of the two new alliances is the reshuffling of their organization and the repositioning of their ships to start their new services next month.”
The Ocean Alliance of CMA CGM, COSCO, Evergreen and OOCL, as well as THE Alliance of Hapag-Lloyd (which is in the process of acquiring UASC), Yang Ming, NYK, MOL and “K” Line start their new services in April.
The ESC said the 2M Alliance of Maersk Line and MSC has stopped accepting freight from competitors’ customers that have turned to 2M because of the capacity shortage.
“Shippers are confronted with heavily damaging situations, ranging from breaching of contractual commitments by some liners to impossibility to get boarding slots before May,” the ESC said. “Either this results in a very fluctuating freight rates situation, with instant hikes up to 45 percent to firm up a booking. Or this translates into missed sales, stock failure, and significant extra costs as some exporters are trying to circumvent these obstacles by using other modes.”
The ESC warned how there could be trouble after Chinese New Year since 60 percent of the capacity on some lanes would be rearranged. “But the magnitude of the turmoil was nowhere to be expected in a background of a still structural overcapacity of the market,” the ESC said.
“This disorder has a significantly more serious impact than the one caused by the installation of the previous alliances two years ago,” the ESC said, noting how it comes just eight months after the Hanjin bankruptcy.
Carriers should “take their responsibility and give an accurate display of the present situation and of its cause, while making sure that everything goes back to normal in the coming weeks,” the ESC said.
The ESC asked regulators to recognize the fact that “three major alliances control close to 90 percent of the capacity on the major trades. Despite carriers not violating any present regional regulation on competition, the combination of a high concentration of players and a recurrent instability within the alliances induces a much higher risk of making this kind of market disruption frequent and significant. This is demonstrated today by the ongoing recombination of partnerships two years after the establishment of the previous alliances, which were supposed to be set for five years.”
In November, the ESC joined with the Global Shippers’ Forum to promote a report that called on regulators to “ensure sufficient independent competition on key trade routes” and repeal existing exemptions from antitrust laws and effective monitoring of alliances.
“Shippers’ representatives have already called and call once more the maritime industry to initiate a constructive dialogue with them and other stakeholders,” the ESC said. “The objective of such a dialogue would be to create the framework for a sustainable market where the liners’ offers would meet the shippers’ expectations of service quality, continuity and predictability.”
European Shippers’ Council complains about ‘huge booking crunch’
