Last week, the European Commission, the EU’s executive arm, launched an investigation into several container lines serving the Asia-Europe trade focused on alleged coordination of freight rate increases. The EC said carriers' methods of announcing increases, including press releases, may be a way of signaling their intentions to each other, thereby reducing competition and harming customers.
“Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialized trade press,” the Brussels-based commissionsaid in a Nov. 22 statement. “The commission has concerns that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe.”
While the EU cites the media as a factor in alleged price signaling by carriers, the carriers are increasingly avoiding going directly to the media to publicize rate increase plans. Some distribute GRI announcements by posting them on their websites or in e-mail newsletters that require the recipient to sign up to receive it. To announce GRIs, Maersk Line sends out a newsletter that requires registration, while Hapag-Lloyd, Emirates Shipping Line, CMA CGM, Cosco Container Lines and Evergreen Line email notices and post the announcements on their websites. Other carriers use just one of those two methods. But irrespective of the distribution channel, news organizations like JOC view carrier GRI announcements as news and will hunt them down.
Although the commission declined to name the carriers under investigation, two carriers — Maersk and CMA CGM — said they had been informed they were part of the probe or intended to cooperate, according to The Wall Street Journal.
Some industry veterans told JOC they can't imagine a scenario where the EU outlaws GRI announcements, as there would be no other way carriers could inform customers of rate increases.
Major Asia-Europe carriers’ GRIs from July through December 2013.Asia-Europe carriers have announced at least 34 rate increases since 2009, according to Alphaliner, which said that in most cases, the timing and amount of the increases were “largely similar” for all the main carriers, with announcements made by carriers within a few days of each other.
“Although carriers varied the amount of the rate increases by between $25 to $100 per TEU at certain dates, it could still come under the EC’s ambiguous ‘concerted practices’ rules as tacit collusion, which do not require an explicit agreement to fix prices,” Alphaliner said in its Nov. 19 weekly newsletter.
JOC.com consolidates many of these announcements in weekly rate revision roundup stories, which confirm that since July, Asia-Europe carriers have been mostly announcing rate hikes in unison. For instance, CMA CGM, ANL and Hapag-Lloyd recently announced planned rate hikes of $750 per TEU on the Asia-to-Europe trade, effective Dec. 15 and Dec. 16. Earlier this month, CMA CGM also said it planned to increase rates in its Europe-to-Asia trade by $200 per 20-foot container and $400 per 40-foot container, effective Nov. 1, similar to Maersk Line, which announced rate hikes of $200 per 20-foot container and $300 per 40-foot and 45-foot container in the same trade lane on the same date.
The EU’s anti-trust investigation calls into question these various methods of announcing GRIs, and whether these methods should be regulated, though it’s unclear how.
Some believe that maritime news organizations should ignore carrier rate increase announcements because of the often wide disparity between increases that carriers announce and actual increases they’re able to achieve in a volatile market often characterized by overcapacity and downward pressure on rates.
“I believe that shipping news organizations should ban all rate announcements from shipping lines as material for news stories,” Charles DeTrenck, a Hong Kong-based shipping analyst, wrote in Maritime CEO in September. “Online third-party objective benchmarking should be allowed.”
