Shipping group steams ahead with plan

Date: 27/02/1997

By Chris Johnstone

EU SHIPPING companies are anxiously waiting for a sign that a four-year war of words, legal writs and court appeals between the sector and the European Commission could be coming to an end.

Some of Europe's biggest shipping companies, joined together in the Trans-Atlantic Conference Agreement (TACA), have sought to put relations with the Commission on a fresh tack by coming up with a new package for transporting goods.

They suggest that clearance from Brussels for the package could pave the way for other competition disputes to be resolved.

But getting such clearance is likely to be far from easy given private comments by Commission officials about the shipping conferences and the retinue of lawyers they have in tow.

The Commission decided at the end of last year to allow a previous agreement on so-called inter-modal tariffs (prices for combined land and sea journeys) to be targeted for heavy fines.

Officials said then that the price fixing by shipping companies could not be justified by any wider benefits to the industry and that firms in the sector were blatantly attempting to force their clients to pay high charges for land-based cargo journeys.

But the shipping companies contested the Commission's legal right to take such a decision.

Now, however, they have come up with a new package for transporting cargo from ports.

“We are hoping that this development on the land side can convince the Commission that progress can be made,” said a TACA source.

Under the latest package, the shipping companies are offering to transport goods to three European hubs at Lyons, Frankfurt and Munich. Customers whose cargo has arrived at ports can either make their own arrangements from there, or take up the option of transport to the hubs or to the final destination.

Prices for the land transport will still be coordinated by the shipping companies but they argue that this time such cooperation can be justified by significantly lower charges and a commitment to take traffic away from roads by using inland waterways and railways.

“We have had some favourable initial reactions from the Commission,” said the TACA source.

He added that the companies were giving the new package a trial run until the end of March, at which stage it could be expanded further.

The agreement by TACA members to set prices and coordinate capacity on sea freight traffic between Europe and North America has also come under scrutiny by competition officials following complaints by shippers.

They said they were forced to pay sharply increased fees under the TACA and its predecessor, the Trans-Atlantic Alliance (TAA). The shipping companies are currently aiming to convince the Commission that rates merely rebounded after an earlier slump and the overall trend has been for a fall in prices.

In any case, say the shipping companies, they are protected from any legal action by the Commission after filing for individual and bloc exemptions against proceedings under EU competition rules.

TACA members have a market share of around 60&percent; of transatlantic freight. Their membership list includes some of the biggest names in the business such as Sea-Land Service (US), AP Moller-Maersk Line (Denmark), Atlantic Container Line (Sweden), Hanjin Shipping (Korea), Hapag-Lloyd Container Linie (Germany), P&O Nedlloyd (Netherlands and UK), Mediterranean Shipping Company (Switzerland), Orient Overseas Container Line (Hong Kong), Polish Ocean Lines (Poland), DSR-Senator Lines (Germany), Cho Yang Shipping (Korea), Neptune Orient Lines (Singapore), NYK Line (Japan), Transportacion Maritima Mexicana (Mexico), Tecomar (Mexico), and Hyundai Merchant Marine (Korea).