Liner rates are complex structures that include various, often obscure,
components, such as BAFs, CAFS, etc. Regarding public announcements on the
other hand, and as the argument goes, if carriers only wanted to inform their clients
of future price increases, they could do so directly (e.g. by letter or
email), without recourse to public announcements in the Press. Economic
theory suggests that, in a cartelized market, advance price announcements by
one producer (carrier) might lead to actual price increases by its competitors.
Recently, the European Commission and the Russian
Competition Authority (Federal Antitrust Service -FAS) have instigated investigations,
adopting “remedies” that virtually annul any possible impact of GRIs on actual
freight rates.
But was this effort necessary?
New econometric research appearing in MEL shortly shows that the impact
of GRIs on actual prices, if any, is minimal and if it exists it exists only
under specific market conditions. Moreover, assuming GRIs could have some effect on competition, they constitute explicit collusion and economic theory
says that such collusion is attempted only when the ‘conspirators’ are unable
to sustain for long tacit collusion (which
is the real concern of competition authorities).
Much ado about nothing therefore? Shouldn’t we be spending
our time instead on the grave consequences of alliances and of shipping industry
concentration?
I (and many shippers and consumers) think so.
HH
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