Shipper body calls for forum to examine liner ‘super-alliances’
Will Waters | Wednesday, 02 March 2016
GSF says the introduction of larger ships and the consolidation of the world’s top 20 lines into four groupings is not delivering the benefits promised to customers
The liner shipping industry must urgently address “the poor quality of service afforded to shippers” since the consolidation of the world’s top 20 lines into ‘super alliances’, the Global Shippers’ Forum (GSF) said this week, arguing that the introduction of larger ships and the consolidation of the world’s top 20 lines into four groupings is not delivering the benefits promised to cargo owners.
Calling for the establishment of a Maritime Industries Supply Chain Forum at an international level “to address the full range of challenges facing the sector”, the GSF said that one year on from the publication of the Organisation for Economic Co-operation and Development International Transport Forum’s report on ‘The Impact of Mega Ships’, there has been “no serious response by the shipping industry to the issues it identified - namely the wider external costs imposed by mega ships and alliances of others in the supply chain, including shippers, port and terminal operators, and governments”.
Speaking at the International Cargo Handling Co-ordination Association (ICHCA) international conference in Barcelona, Global Shippers' Forum secretary general Chris Welsh said: “Shippers have generally supported cooperation through consortia and vessels sharing agreements as the appropriate means of rationalising costs, provided they themselves receive a share of the benefits in terms of enhanced quality and a wider range of services made available to customers.”
But several years on from the introduction of larger ships and the consolidation of the world’s top 20 lines into four ‘super alliances’, shippers continue to experience poor quality services and disruption to their supply chains through the bunching of vessels, void sailings and delays, GSF said.
Welsh continued: “The onus is on the shipping industry to demonstrate that the bigger ships and alliance business model is the best response to the economic and financial challenges faced by carriers but also adds value to customers. We believe cooperation between the main international stakeholders in a new maritime industries forum would enable the wider maritime supply chain to develop solutions to the problems presented by bigger ships and alliances in a constructive and consensual manner.
“The received wisdom is that bigger ships and alliances are good for competition because of the benefits they are said to confer. If the reality is that they add costs because of the negative externalities they impose on others, and if they restrict choice through reduced service competition, then other regulatory or competition policy approaches may be necessary to deal with the competition issues raised by mega vessels and alliances.”
The GSF has long called for global regulators to keep a close watch on the super-alliances being formed by the world’s top global container lines, calling for a rigorous set of monitoring KPIs to identify whether the alliances are delivering their promised service and cost improvements. Last year the GSF said: "Shipping alliances need to take responsibility for monitoring, measuring and benchmarking their performance on key trade routes to demonstrate enhanced alliance performance, and make that information transparent to regulators and their customers as evidence of their commitment to showing the pro-competition benefits of improved alliance services.
“Such confidence-building measures are necessary in view of the concentrated market power of the four main alliances covering the world’s main trade lanes and smaller niche and regional liner markets which are directly or indirectly impacted by the alliances.”
The Global Shippers’ Forum was created in 2006 as the successor to the Tripartite Shippers’ Group, to represent the interests of various national and regional shippers’ organisations in Asia, Europe, North and South America and Africa. The GSF is focused on the impact of commercial developments in the international freight transportation industry and the policy decisions of governments and international organisations that affect shippers and receivers of freight.
Calling for the establishment of a Maritime Industries Supply Chain Forum at an international level “to address the full range of challenges facing the sector”, the GSF said that one year on from the publication of the Organisation for Economic Co-operation and Development International Transport Forum’s report on ‘The Impact of Mega Ships’, there has been “no serious response by the shipping industry to the issues it identified - namely the wider external costs imposed by mega ships and alliances of others in the supply chain, including shippers, port and terminal operators, and governments”.
Speaking at the International Cargo Handling Co-ordination Association (ICHCA) international conference in Barcelona, Global Shippers' Forum secretary general Chris Welsh said: “Shippers have generally supported cooperation through consortia and vessels sharing agreements as the appropriate means of rationalising costs, provided they themselves receive a share of the benefits in terms of enhanced quality and a wider range of services made available to customers.”
But several years on from the introduction of larger ships and the consolidation of the world’s top 20 lines into four ‘super alliances’, shippers continue to experience poor quality services and disruption to their supply chains through the bunching of vessels, void sailings and delays, GSF said.
Welsh continued: “The onus is on the shipping industry to demonstrate that the bigger ships and alliance business model is the best response to the economic and financial challenges faced by carriers but also adds value to customers. We believe cooperation between the main international stakeholders in a new maritime industries forum would enable the wider maritime supply chain to develop solutions to the problems presented by bigger ships and alliances in a constructive and consensual manner.
“The received wisdom is that bigger ships and alliances are good for competition because of the benefits they are said to confer. If the reality is that they add costs because of the negative externalities they impose on others, and if they restrict choice through reduced service competition, then other regulatory or competition policy approaches may be necessary to deal with the competition issues raised by mega vessels and alliances.”
The GSF has long called for global regulators to keep a close watch on the super-alliances being formed by the world’s top global container lines, calling for a rigorous set of monitoring KPIs to identify whether the alliances are delivering their promised service and cost improvements. Last year the GSF said: "Shipping alliances need to take responsibility for monitoring, measuring and benchmarking their performance on key trade routes to demonstrate enhanced alliance performance, and make that information transparent to regulators and their customers as evidence of their commitment to showing the pro-competition benefits of improved alliance services.
“Such confidence-building measures are necessary in view of the concentrated market power of the four main alliances covering the world’s main trade lanes and smaller niche and regional liner markets which are directly or indirectly impacted by the alliances.”
The Global Shippers’ Forum was created in 2006 as the successor to the Tripartite Shippers’ Group, to represent the interests of various national and regional shippers’ organisations in Asia, Europe, North and South America and Africa. The GSF is focused on the impact of commercial developments in the international freight transportation industry and the policy decisions of governments and international organisations that affect shippers and receivers of freight.
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