Shipping lines are seeking to extend the exemption that allows vessel sharing agreements on trades with the EU.
Four associations representing the interests of international liner (container) shipping companies have called on the European Commission (EC) to extend its block exemption regulation (BER) that allows consortia to operate on trades with the EU. The current legislation is due to expire in April 25, 2020 and the EC has been seeking information from parties affected by bill since the autumn.
In an 85-page joint submission to the EC, the Washington (DC)-based World Shipping Council (WSC), London-headquartered International Chamber of Shipping (ICS), Brussels-based European Community Shipowners’ Association (ECSA) and Singapore-headquartered the Asian Shipowners’ Association (ASA), stressed that the BER had provided the industry with tremendous stability and lower freight rates. They requested the current BER be extended for five years.
Specifically, the associations argued that vessel sharing arrangements were fundamental to the container shipping industry, that BER provided the legal certainty and transparency to their operations and that despite recent mergers the industry was highly competitive with freight rates at half their level of 20 years ago.
It was a point stressed by John Butler, president and CEO of WSC: “The bottom line is that the BER has worked very well for almost 25 years. It sets out clear rules that can be practically applied without the need for extensive legal analysis. This means that carriers can focus on seeking the most efficient transportation solutions without the cost and delay associated with legal self-assessment for these routine operational arrangements.”
Captain Ang Chin Eng, secretary general of ASA, “homed in” on the importance of having tight legal uniformity: He said: “It is in the interest of international trade that policies and laws are aligned globally at both ends of the trade route which will provide clear guidance for international shipping and many Asian countries have legal regimes that treat liner shipping consortia in the same competitive manner as the EU.”
Meanwhile, Martin Dorsman, secretary General of ECSA, argued that the liner shipping sector was still massively competitive. “A lot has changed in our industry in the past five years, but the fact is that there is still fierce competition among carriers,” he said. “The purely operational agreements covered by the BER foster competition by lowering barriers to entry and enabling carriers to compete on more routes.”
The submission also stressed that BER contributed to higher vessel utilisation levels being achieved and that this in turn contributed to a reduction in vessel emissions. The latter issue is increasingly significant given the MARPOL 2020 cap on sulphur in bunkers which comes into effect in January 2020.
“A factor that is new in this review of the BER is the fact that the International Maritime Organisation has now set concrete goals for greenhouse gas emissions reductions for the international shipping industry. We will need to use every available tool to increase efficiency, and the BER supports vessel sharing that is a key tool for the liner sector to reduce its fuel burn and therefore reduce its emissions,” commented Guy Platten, secretary general of ICS.