ELAA’s Bourne Assesses Liner Shipping on the European Trades Post-Conferences

By: | at 07:00 PM | Channel(s): Liner Shipping  

Speaking at the Global Shipping Summit in Dalian last week, ELAA’s Executive Director Chris Bourne outlined the challenges his Members face in the current poor trading environment, co-incidental with the EU’s abolition of liner shipping conferences.
Chris Bourne first made it perfectly clear that the abolition of Conferences in Europe that occurred in October 2008, as a consequence of the repeal of the EU regulation 4056/86, had not precipitated the current crisis in liner shipping. “The regulatory move, however,” stated Bourne, “Could not have come at a worse time for the industry.”

While uncertainty created by the end of the Conference system inevitably added to the destabilization of the market, Bourne is of the opinion that supply/demand imbalances within the European container trades have been so great in 2009 that the existence of Conferences would not have saved the situation. “However, even if it is difficult, if not impossible to judge, the freefall of rates on the major Asia-Europe trade might not have been so severe if the Conference system had still been active in Europe,” he said.

Recently published ELAA statistics show that the rate of decline in trade has slowed in the third quarter compared to the second westbound on the all-important Asia-Europe trade (down by 14% in quarter 3 versus a 22% decline year-on-year in the second). However the comparable Price Index still shows rates down by around 40-45%. Export volumes from Europe have however improved and in some recent months have exceeded last year.

There have been other consequences of Conference abolition twelve months ago that Bourne suggests might well have confused the market at a time when, as volumes dropped dramatically, keener focus would have been more beneficial. One such issue was the uncertainty over ancillary charges and bunker and currency surcharges. With lines having to introduce their own tariffs, shippers have had difficulty in getting clarity in comparing the various rates on offer.

The global regulatory situation remains in flux and such uncertainty would clearly not be good for any industry. While the European Commission in Brussels had hoped that the regulatory bodies around the world would follow its lead in banning Conferences, there is little sign of this happening. As Bourne comments, “There is little prospect of a global competition law for the shipping industry in the near future. While we have learned that meaningful dialogue with regulators is useful through our experience in Europe, the lines still feel threatened by competition law that certainly lacks uniformity around the world. The lines operate globally but the regulators do not, as yet, have the same global perspective.”

American Journal of Transportation