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Monday, 23 June 2014 00:00 - - {{hitsCtrl.values.hits}}
The interesting factor was that the Federal Maritime Commission (FMC) and the European Competition Commission gave the green light to the alliance over the last few months. This obviously meant the Europeans and the Americans had their consumers, manufacturers and industrialists, protected against anti-competitive practices in terms of price fixing and surcharges in the global trade transportation industries when it comes to their economies and the region through proper regulatory mechanisms.
"The problem has gone beyond the shipping lines to the rest of the supply chain via mushrooming logistics providers who have been given a free hand in Asia"
In many a columns and industry papers in the past I have discussed and pointed out that Asian and African countries lacked such regulatory reforms to correct ambiguities in the free market where unequal bargaining powers in global trade should be checked for ethical and the correct practices. Asia being the world’s manufacturing continent with a growing consumer market as well, has kept its doors open and vulnerable for anti-competitive practices.
Over the last week, the Chinese Government has recognised that allowing a close to monopolistic ocean transport industry should not be given a window of opportunity to price control through using its capacity to control demand and supply in the market.
Indeed the official press release released by the China Shippers’ Association last week said: “As known to all, the existing liner conferences or discussion agreements have already abused their monopolistic and dominant power for decades to impose more than 20 kinds of unreasonable surcharges to FOB (free on board) export shippers who have no contract relations with the liners. Shippers have to pay the unreasonable surcharges in order to get the bill of lading. China and the rest of the Asian countries or regions suffered a great deal from the liner blocs.”
Certainly in my opinion the problem has gone beyond the shipping lines to the rest of the supply chain via mushrooming logistics providers who have been given a free hand in Asia.
The Global Shippers’ Forum (GSF) too has identified the same unfair practices for shipments originating from Africa and Asia, in a press release in May 2014 it has recommended the governments around the world to look at a piece of legislation that has been introduced by the Government of Sri Lanka. It calls for transparency, clarity and accountability on payment of freight and logistics costs and parties contacting to be responsible for such negotiations.
The P3 was probably not successful because the global regulatory environment was not uniformed for areas of common interest. The future in my opinion is in the hands of the global service providers for transportation and logistics. They should have wider dialogue with their clients (shippers), otherwise the result would be the governments will have to intervene to establish fair trade to protect the interest of individual nations against anti-competitive behaviour when markets are more open and liberalised for trade more than ever before.
(The writer is an economist and the CEO of the Shippers’ Academy Colombo, past Chairman of the Sri Lanka Shippers’ Council and the immediate past Secretary General of the Asian Shippers’ Council.)
