Shipping alliances do not violate anti-trust regulations, expert says

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MEGA shipping alliances are not breaching antitrust rules, according to Aitken Spence Maritime and Logistics chairman Parakrama Dissanayake, who sought to allay shippers' feats that such blocs pose a threat, reports Sri Lanka's Sunday Observer.

Dr Dissanayake pointed out that four mega shipping alliances MSC and CGM, Maersk Line, Grand Alliance and New World Alliance and CKYHA - Evergreen from Asia to Europe control a shipboard capacity of 13.4 million TEU and a market share of 85.8 per cent. From January to April this year the four shipping alliances increased freight rates 60 per cent compared to last year.

Notwithstanding rate increases, the global fleet in the 8,000-TEU category will grow by 25 per cent this year posing a threat to freight rates and profitability of shipping lines.

In this backdrop, Maersk Line expects losses again this year as announced by its chairman of its parent group recently at its annual general meeting.

Dr Dissanayake said that under the current European Union regulations, each consortium within major east and west trade lanes can have a maximum market share of 30 per cent. Maersk Line controls 19.3 per cent as against MSC/CGM-CMA's 29.9 per cent on the Asia-Europe route. Grand Alliance and New World Alliance have 17.3 per cent while CKYH and Evergreen have 18.4 per cent.

"Therefore, it is evident that the mega shipping alliance recorded so far does not appear to break any antitrust rules. However, in the short term, shippers would not be able to do much as the regulations come up for renewal again only in 2013," Dr Dissanayake said.

He said mega consortia will provide shippers with better service frequencies and port coverage. Also further membership in lines will be better placed to compete against "daily Maersk service from Asia to North Europe."

Dr Dissanayake said that a question is being posed: "Will all this lead to fewer transshipments since ocean carriers will gain economies of scale to call at secondary ports?"

Shipping Gazette - Daily Shipping News

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