Alliances Chasing Consortium Extension

The steamship alliances have called for an extension on their block exemption agreement with the European Union this week, as they seek approval to continue their arrangements for another 5 years.

The EU commission approved the current exemption in 2014, which allows major shipping lines to trade as alliances within the EU, and it is due to expire in April 2020. However, the market share of the alliances has increased since the big three consortiums were introduced during the past couple of years.

The block buying power of the alliances is believed to be a concern for the EU, especially when buying port and terminal services.  This issue was also the main subject of a bill passed in the US this month, which provided the FMC with greater powers to regulate alliances.

The new US regulations included the requirement for the FMC to report to Congress on a yearly basis, outlining the impact and effects of the ocean carrier alliances and on anti competitive behaviour.

The industry has witnessed a series of mergers and acquisitions since the demise of Hanjin, which has substantially reduced the number of steamship lines operating. In the most part carriers continue to make losses, so will argue that without the sharing of alliance resources they may be unable to continue providing the services that they currently do.