NIT League condemns ELAA’s proposal
The National Industrial Transportation League has backed up the European Shippers’ Council, one of its partners in the Tripartite Shippers’ Group, by criticizing the European Liner Affairs Association’s proposals for a post-liner conference system in Europe.
The ESC has been in a bitter fight with the carrier group ELAA since the European Commission made its proposal to repeal Regulation 4056/86, which grants liner conferences an exemption to set common freight rates and cooperate on capacity. The ELAA in June put forward its second proposal for a replacement model that it feels is vital to ensure stable rates and reliable services and hopes that the EC will include in its upcoming guidelines on the application of the new competition rules.
Highlights from the ELAA’s revised proposal are:
* “The establishment of a port-to-port aggregated volume database, based on figures supplied by the carriers to an independent data service.”
* “Provision for an industry supply and demand forecast produced with the help of an independent expert.”
* “Acknowledgement of the need to improve industry-wide consultation; this would be organized by a Liner Shipping Association. This system will include carrier discussions as well as consultations with other industry stakeholders. The objective is to improve our collective understanding of the trends in our business. We must also consider the requirements of our customers as represented by shippers’ organizations.”
* “Establishment of a simple aggregated price index by trade direction.”
* “Publication of information from the public domain, which will increase the transparency of our costs such as bunkering, canal dues, port charges and currency exchange rate exposure.”
* “The absolute necessity for all the information generated being made available to the general public and the benefit of all industry stakeholders, carriers, shippers, freight forwarders, port authorities, governments and others.”
The NIT League was involved in discussions with the Organization for Economic Cooperation and Development (OECD) back in 2001 about regulation of the liner industry and met with the EC’s Directorate General for Competition (DG Comp) in February this year to outline the effects of the Ocean Shipping Reform Act of 1998 in the United States.
Peter Gatti, executive vice president of the NIT League, last week sent a letter to the DG Comp outlining his organization’s concerns.
“The overall objective of the European authorities should be to create an environment where competition among carriers and the forces of supply and demand determine shipping rates and charges in the liner trades,' Gatti said.
“To the maximum extent possible, rates should be formulated based on an individual carrier’s calculation of its individual costs and necessary return on investment and the carrier’s individual evaluation of market conditions, and should not be influenced by collective carrier discussions.
“ELAA appears to recognize the need to change and replace the old-line conference system with a more modern regulatory scheme ' However, its revised proposal still seems to reflect a ‘mind-set’ that aims to preserve traditional collective discussions among the carriers to the maximum extent possible,” Gatti said.
The NIT League did accept that one aspect of the ELAA’s proposal — the publication of cost factors — could be a positive move. “The league believes that this aspect of the ELAA proposal could prove beneficial to the industry as a whole, in particular because making this information available to shippers could lead to a greater understanding of the basis for certain ancillary charges and, therefore, facilitate contract negotiations between shippers and carriers,” Gatti said.