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Box lines seek for enterprise

Box lines seek for enterprise
Container lines are hoping the European Commission will be able to deliver some good news in the next few weeks, amidst almost unrelenting gloom across the industry.

Container lines are hoping the European Commission will be able to deliver some good news in the next few weeks, amidst almost unrelenting gloom across the industry.

Container lines are hoping the European Commission will be able to deliver some good news in the next few weeks, amidst almost unrelenting gloom across the industry.

A revised draft of the new rules on consortia agreements is expected to be circulated by Brussels soon, and the European Liner Affairs Association will then learn whether its lobbying efforts have been effective.

The ELAA, now chaired by Maersk Line chief executive Eivind Kolding, has been pressing hard for a re-think on the original proposals concerning the amalgamation of market shares.

With container shipping now heading into the steepest contraction it has ever experienced, industry bosses were worried that amendments to the existing consortia regulation that expires next year would make matters even worse.

But Brussels appears to have been taking heed of these concerns, according to ELAA director Chris Bourne.

?The industry has had a constructive series of discussions with competition directorate officials, and we feel they are listening to us,? he told.

The ELAA, which is expanding its role following the dissolution of the conference system in Europe, has just published the first set of trade statistics that shows the depth of the downturn late last year when cargo volumes suddenly collapsed.

On the key Asia to Europe route, for example, liftings dropped by 12% between October and November, according to data compiled by ELAA subsidiary Container Trade Statistics. Provisional year-on-year figures indicate that volumes were 15% down in November compared with a year earlier.

The ELAA expects to publish the December data within a few days and have comparative 2007 and 2008 figures ready by March. After that, the trade statistics will be updated regularly with a time lag of about six weeks, and are expected to prove a vital tool for the industry as liner operators manage the downturn.

Alliances, which enable lines to share ships or charter slots from each other while still competing on price, are also seen as an essential way of containing costs and improving efficiency, and Brussels has always recognised their benefit.

But draft proposals issued last year that would have required container lines to aggregate market shares in situations where there are inter-linking arrangements between consortia, or where a line provides a service both individually and through an alliance on the same trade route, set off alarm bells.

That is because aggregation would put many such arrangements above the 30% market share limit that Brussels wants to set, forcing participants to conduct a self-assessment to check for compliance with EU competition rules. Thin trades, where the 30% ceiling would easily be breached, could face particular problems if the aggregation requirement is adopted.

Lines argue that they compete fiercely with each other, even when using the same ships, and that the proposed restrictions would be counter-productive.

Although some submissions to Brussels commenting on the draft rules called for a public inquiry, this is not expected to happen.

However, industry representatives are hoping Brussels has taken note of the problems that the aggregation clause would cause, and will make amendments to the next draft.

The new regulation will take effect in April 2010 when the current five-year consortia block exemption expires.

www.TurkishMaritime.com.tr

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