S0METHING like the quasi-conference, Transpacific Stabilisation Agreement, should be applied to the Asia-Europe trade, says Paris-based consultant Alphaliner.
Bringing back the conference system ?albeit with provisions against cartel behaviour ?should be explored to bring some sanity and consistency back to the liner shipping system," said the Paris-based research house.
The banning liner conferences on European trades in October 2008 was aimed at spurring competition, but instead resulted in underminubgv carrier service reliability and increased rate volatility, said it report.
"The current dysfunctional pricing structure does not work and is beneficial of either shippers or carriers," it claims.
Alphaliner's call for a rethink of the abolition of liner conferences comes as carriers seek to implement a general rate increases of up to US$1,000 per TEU on the Far East-north Europe route in the wake of four unsuccessful attempts to hike rates this year.
The latest is the highest ever proposed on the trade even as spot rates are currently only around $600 per TEU, Alphaliner notes.
Carriers are trying to increase rates against a backdrop of declining operating costs due to the deployment of larger vessels, widespread slow steaming and the recent drop in bunker costs that has reduced the break-even rate to around $750 to $800 per TEU at current fuel prices.
This was not the aim of European competition regulators when they outlawed liner conferences, leading to the demise of the Far Eastern Freight Conference four and a half year ago.
"Instead of establishing a more competitive landscape for carriers to price according to their respective service levels and cost base, the move has created a dysfunctional pricing system, where ocean freight and surcharges are set in an arbitrary manner," said Alphaliner.
"While carriers need to earn a reasonable return for providing their shipping services, the current freight pricing system has become untenable," said the consultancy's report.
WORLD SHIPPING
31 March 2015 - 21:03
Asia-Europe trade needs TSA system - not today's 'dysfunctional pricing'
S0METHING like the quasi-conference, Transpacific Stabilisation Agreement, should be applied to the Asia-Europe trade, says Paris-based consultant Alphaliner.
WORLD SHIPPING
31 March 2015 - 21:03
Asia-Europe trade needs TSA system - not today's 'dysfunctional pricing'
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