ELAA is pleased that a new Consortia Block Exemption Regulation (BER) will result from this regulatory review, and is keen to continue a constructive dialogue with the EC in order to arrive at a revised BER that is ‘fit for purpose', and will provide carriers with much needed legal certainty in the current very challenging economic environment.
Carrier consortia are common on most deep-sea trades and have been for some years. They enable carriers to share the vessel resources required to operate a regular service between a range of ports on a particular trade, e.g. Asia - Europe. They are purely operational arrangements within which each carrier independently determines its commercial policy.
Consortia significantly enhance the regularity, reliability and choice of services available to shippers - which, generally, individual carriers operating on their own are unable to provide.
According to executive director Chris Bourne, the ELAA has concerns about the EC's current draft BER. The EC's proposed calculation of market shares is to aggregate the shares of all consortia that have a common line partner. This effectively creates a monolithic block with very high market share levels, which are totally unrealistic since each carrier within each consortium acts independently and does not unite in any way the commercial actions of its fellow consortia members.
A survey conducted by trade publication, Containerisation International, reveals that 86% of shippers are in favour of carriers being allowed to exchange slots (or share vessel capacity) between consortia on the same trade in order to provide better service coverage.
ELAA points out that the role of consortia in the current deteriorating global economic situation is critical to maintaining efficient service levels for shippers that would otherwise be impossible for carriers to deliver. Rationalisation through mergers and acquisition is a common consequence of recession, and consortia - by their nature - provide a counter balance to this trend that, if run unabated, would lead to a severe reduction in customer choice.
"Now is not the time for a new regulation that has the effect of destabilising the consortia system," says Bourne, adding that the system has not only proven itself in practice, but is has the approval of end-users and in no way constitutes a barrier to competition.
ELAA urges the EC to amend its current BER draft to take these points into account, and also to consider raising the market share threshold and extend the permitted lock-in periods and termination notices for consortia agreements.
"We know that consortia are not being abolished, but the draft BER as it stands is not workable," says Bourne. "Legal certainty in this area is vital. Without it there will be a significant deterioration in the extent and quality of liner services and European shippers of all types will suffer."
