The European Commission urged to restore order in container transportation

The European Association of Freight Forwarders, Transport, Logistics and Customs (CLECAT) has sent a letter to the European Union calling for an investigation into the container transport sector, alleging unfair and discriminatory practices.

“Speculation by ocean carriers as a result of their capacity management strategy has allowed them to acquire market power and financial reserve, which they now use to vertically integrate, raise rates and squeeze out independent forwarders in the downstream market,” suggests CLECAT. Claims of discriminatory behavior towards forwarders will ultimately disadvantage shippers and end users due to limited service choices and higher rates.

CLECAT sent a letter to Margrethe Vestager, Commissioner EU on Competition, asking the European Commission to use its investigative powers to ascertain the degree of concentration, consolidation, coordination and cartelization in the markets for container liner services serving the EU and the subsequent markets for forwarding services.

CLECAT urged the commission to investigate, under EU competition rules and in the context of the Consortium Blocking Regulation (CBER) revision, the market impact of the combination of block exclusion, vertical integration, consolidation, data control and resulting market dominance.

Nicolette van der Jagt, CEO of CLECAT, commented: “Vertical integration is particularly unfair and discriminatory as carriers enjoying exemptions from normal competition rules use windfall profits to compete with other sectors that do not have such immunity.”

She added: “Consolidation is also problematic as fewer carriers result in fewer service options, space allocation restrictions and market dominance, which in turn allows multiple carriers to differentiate between larger BCOs, SMEs and freight forwarders, which then leads to higher rates for all.”

To date, the European Union has shied away from investigating the jetliners while other jurisdictions, notably the US, have been tackling the issue in recent months.

The cumulative profit of liners last year exceeded $200 billion, and at the same time it was the worst period of schedule reliability in the history of containerization.

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