ESC: Shippers Facing Obstacles amid Alliance Changes

Shippers who regularly export goods to Asia have been facing a large drop of available slots for containers on almost every shipping line due to changes being introduced by alliances, European Shippers’ Council (ESC) members informed.

The main reason given by carriers of the two new alliances is the reshuffling of their organization and the repositioning of their ships to start their new services from April 1.

M2 alliance, which comprises Danish shipping giant Maersk Line and Swiss Mediterranean Shipping Company (MSC), has stopped accepting freight from customers of competitors turning to them because of the shortage of capacity encountered.

“Shippers are confronted with heavily damaging situations, ranging from breaching of contractual commitments by some liners to impossibility to get boarding slots before May. Either this results in a very fluctuating freight rates situation, with instant hikes up to 45% to firm up a booking. Or this translates into missed sales, stock failure, significant extra costs as some exporters are trying to circumvent these obstacles by using other modes,” ESC said.

According to ESC, 60% of the capacity on some lanes would be rearranged. However, the magnitude of the turmoil was nowhere to be expected in a background of a still structural overcapacity of the market.

“This disorder has a significantly more serious impact than the one caused by the installation of the previous alliances two years ago. It also comes only eight months after the very severe consequences of Hanjin bankruptcy,” the council added. 

ESC has urged carriers to take their responsibility and give an accurate display of the present situation and of its cause while making sure that everything goes back to normal in the coming weeks.

The council has also drawn the attention of the regulation authorities to the current market structure where three major alliances control close to 90% of the capacity on the major trades.

“Despite carriers not violating any present regional regulation on competition, the combination of a high concentration of players and a recurrent instability within the alliances induces a much higher risk of making this kind of market disruption frequent and significant,” ESC pointed out.

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