Shipping firms lobby Indian government.
Global container shipping firms are lobbying with the government for exempting voluntary discussion and vessel-sharing agreements between carriers from India's anti-competition law, the Bharat Observer reported. The economics of container shipping service in India calls for a regulated system of carrier discussion and vessel-sharing groups to provide reliable services at reasonable and predictable prices to exporters and importers, says a study conducted by UK maritime consulting firm Drewry Shipping Consultants Ltd. Drewry was hired by the Center for Asia Studies, a Chennai-based think tank.
Voluntary discussion and vessel-sharing agreements are not the same as liner shipping conferences-a group of container shipping firms that offer equitable freight rates, standardised shipping practices and regular scheduled services between designated ports. Member lines of such conferences agree on freight rates irrespective of market conditions, a decision that is acted upon by all the members.
The Competition Commission of India prohibits shipping conferences because it considers price fixing and market sharing as cartelisation.
Voluntary discussion agreements (VDAs) allow carriers, on a limited basis, to share market information, adopt common service standards and offer a single point of contact in discussions with government bodies and shipper organisations.
Vessel-sharing agreements (VSAs) allow carriers to share space on each other's vessels, consolidate duplicative services and share terminals to improve productivity and lower costs.
Drewry warns that there would be unintended consequences if the government does not grant an exemption, given the range of carriers reliant on VDAs and VSAs in the country.
Drewry's analysis of trade in the country reveals that of the 26 identified services in India's highest volume container trade, to and from the Far East, 20 are operated by multiple lines through VSAs. These have proven to be better than single operators in maintaining available capacity with minimal service reductions. The VSAs include a number of mid-size regional and niche carriers, among them state-run Shipping Corporation of India, that leverage the scale and cost savings of an agreement to extend their service reach in the Indian market.
VSAs carry 75 percent of India's intra-Asia container trade, but they also keep nine lines operating in the India-Europe market and six operating to and from North America, which might not otherwise participate in the market. They present additional route and schedule choices for Indian shippers and, in some cases, access to specialized services and even new markets.