Monday, October 16, 2023


 In 2005, we had warned the European Commission (see Erasmus Report) that the prohibition of conferences from European trades was a big mistake. Its consequences, we claimed, would be stronger and fewer alliances, i.e., more concentration and opportunities for its abuse. They did not listen. Dressed to kill, hand-in-glove with shippers (the European Shippers' Council), they forbode liner conferences and we have all seen the results of this, which are exactly as we predicted in 2005. But the Commission, it seems, does not learn from its mistakes and is bound to make an even bigger mistake which will lead to mergers, acquisitions and hostile takeovers. In the end, the shipper will pay again through fewer services and heightened unreliability. 

The Commission claims that CBER does not promote competition anymore. It blatantly fails to understand, however, that more competition was never the intention of CBER. Instead, following the prohibition of conferences, the Regulation was affording carriers some 'self-regulatory' discretion because, in industries such as liner shipping, outright competition on marginal cost becomes destructive.

The right step, therefore would have been better regulatory surveillance, instead of expecting the carrier to prove himself that he is not an elephant. This is exactly what President Biden asked FMC to do (better regulatory work) a few months back. Following its review, the latter (FMC) decreed that there is nothing 'sinister' behind alliances and the astronomical profits of the covid-19 period were nothing more that the effects of a supply and demand imbalance. Indeed, if one observes today's precipitous drop in freight rates, one and only one conclusion can be drawn: even if carriers had some degree of monopoly power, they have never been able to make it work.-