The British International Freight Association (BIFA) has written to the UK government asking it to investigate the state of competition within the current deepsea container shipping market.
BIFA’s director general Robert Keen expresses the trade association’s concern that during a period of well-documented chaos within the container shipping sector, commercial power is becoming increasingly concentrated, resulting in diminished market choice and competition, and distorted market conditions.
Keen said: “BIFA members fully accept that a free market economy is open to all but are increasingly concerned that the activities of the container shipping lines, and the exemptions from legislation from which they benefit, are distorting the operations of that market to the shipping lines’ advantage, whilst adversely and unfairly affecting their customers, especially freight forwarders and SME businesses.
“The facts speak for themselves. During a period that has seen EU block exemption regulations carried forward into UK law, there has been huge market consolidation.
“In 2015, there were 27 major container shipping lines carrying global containerised trade, with the largest having a 15.3 percent market share. Today, there are 15 shipping lines, organised into three major alliances carrying that trade, with some analysts observing that the market share of a single alliance on certain key routes could be over 40 percent.
“The pandemic has highlighted and accelerated this development, which has also contributed to dreadful service levels, and hugely inflated rates, with carriers allocating vessels to the most profitable routes with little regard to the needs of their customers.
“Drewry recently issued a profit forecast of more than USD150 billion for 2021 for the main container shipping lines for which financial results are available.
“To put that into perspective, this is more than has been achieved in the previous 20 years combined, and many BIFA members consider it to be a case of blatant profiteering.”
BIFA has joined a growing number of organisations, including CLECAT and FIATA, the US Federal Maritime Commission, and the Australian Productivity Commission in calling for governments at a national and pan-national level to give careful consideration to the evolving business arrangements in the container shipping market to see whether they are in breach of competition law.