Container carriers have offered to publish binding actual rates a month before they go into effect, according to a recent report from Reuters news service.
Fifteen container liner shipping companies “have offered to change their pricing practices to settle an EU antitrust probe and stave off possible fines,” according to a report from Reuters Wednesday that cites two unnamed sources.
The report said the European Commission would not confirm the development, but that it could change the practice of shipping companies announcing planned general rate increases.
On Nov. 22, 2013 the European Commission announced it had opened formal antitrust proceedings against several container liner shipping companies “to investigate whether they engaged in concerted practices,” citing their practice of “making regular public announcements of price increase intentions
through press releases on their websites and in the specialized trade
press.”
“These announcements are made several times a year and contain the
amount of increase and the date of implementation, which is generally
similar for all announcing companies,” the EC noted. “The announcements are usually made
by the companies successively a few weeks before the announced
implementation date”
The EC said it had “concerns that this practice may allow the companies to signal future price intentions to each other and may harm
competition and customers by raising prices on the market for container
liner shipping transport services on routes to and from Europe,” adding it would “investigate whether this behavior amounts to a
concerted practice in breach of Article 101 of the Treaty on the
Functioning of the European Union (TFEU) and of Article 53 of the
European Economic Area (EEA) Agreement.”
“The companies have offered to publish binding actual rates a month before they go into effect, the people said. In some circumstances, the figures may act as a price cap,” the Reuters report said.
Richard Ward, a freight derivatives professional at Freight Investor Services in London told American Shipper, “The investigation has raised more questions than answers in my mind.”
“My understanding is that if the case is settled and carriers go ahead, GRI’s in their current guise will cease,” said Ward. “The big question I see remaining is: will they instead publish actual rates with effective dates, and in practical terms, how will this differ from announcing a GRI as it still could show their intention to increase rates?”
He agreed with the sources cited by Reuters that actual rate announcements could “in effect act as a cap (thereby increasing rate transparency somewhat) to any planned increases, however, again in reality it’s likely that very few shippers will pay the full increase anyway much like a GRI. Again, in practical terms, how does this differ to the current situation?”
Reuters said the case is also “being closely watched by other sectors such as supermarkets and chemical firms, which use similar methods to announce future price hikes to enable customers choose the best rates.”
Report: Possible settlement in EU probe into liner price signaling
