EU regulators decline to investigate container shipowners over record high rates

Houston — EU competition regulators have decided against investigating container shipping lines for record high rates, and will instead pursue a dialogue with regulators in the US and China to find solutions to underlying supply imbalances in the market, according to the European Shippers Council.

The ESC and European Association for Forwarding, Transport, Logistics and Customs Service, or CLECAT, brought complaints to the European Commission's Directorate General for Competition over spot rates as high as $16,000/FEU amid empty container shortages and a decline in reliability, with only around 50% of ships arriving on time in recent months, the Brussels-based ESC said in a news release on Jan. 23.

The container shipping industry has been operating under a sector-specific block exemption regulation in the European Union since 2009 that allows it to operate outside competition laws. The Directorate General for Competition decided that it will only take regulatory action against shipowners once a formal review of the exemption is launched or in the context of a legal complaint, the ESC said.

"The Commission responded to be fully aware of the present market situation including recent price hikes, which from their point of view were mainly due to the wane and surge on the demand side as a consequence of the COVID-19 crisis," the ESC said.

Platts Container Rate 1 -- North Asia to UK-Continent -- more than tripled from Nov. 30, 2020, to $8,500/FEU on Jan. 25, 2021, as a shortage of empty containers in Asia and strong demand allowed shipowners to rapidly increase spot rates.

But the Directorate General for Competition acknowledged a need for a global overview of the situation and would seek out dialogues with its regulatory counterparts, including the US Federal Maritime Commission and China's Ministry of Commerce, the ESC said.

"ESC would like to highlight the specific responsibility that carriers have to endorse in exchange of the protection they have from standard competition laws," the council said. "They should not abuse of these privileges as it seems to be the case today."