News
The International Federation of Freight Forwarders Associations (FIATA) recently has issued a statement worrying about Maersk’s integrated
services.
Dr St phane Graber, FIATA Director General said, “The recent Notice to Users of the freight services of A.P. Moller Maersk Group and its integrated services, which restricts access for international freight forwarders in many economies through shifts from contracted arrangement to spot rates, raises serious concerns as to significant changes in business practice and the long established lex mercatoria in the shipping industry. The freight forwarding industry, as a key organizer of service delivery across all modes of transport in door-to-door operations, are expected to be significantly disadvantaged, with shippers and consumers being ultimately worst hit.
“Such practices are considered to amount to market domination and competitive distortions, which have been made possible by way of governmental tax reliefs and subsidies to shipping lines in a variety of jurisdictions. Dramatic changes have already taken place in the number of shipping lines providing service offerings for the international movement of goods by sea, with mergers and acquisitions over the past two decades seeing consolidation into a handful of dominant shipping lines who have furthered that dominance by forming key alliances. These lines, and alliances, have also set out to vertically integrate services through the acquisition of terminal handling operations, national and international freight forwarding entities. In most economies, regulators have been slow to take action on the anti-competitive aspects of these mergers or alliances in the provision of international trade logistics, as well as the impact on consumer prices at a time of significant fiscal constraint.
“These changed arrangements, which have been accelerated and facilitated by the pandemic, have resulted in significant unanticipated profits by these “few” and their ability to determine the viability of others offering freight services in a now highly disrupted and volatile marketplace. Their integration allows them to make price differentiation which impacts free market competition. It is highly regrettable that these profits are not better used to invest in decarbonization and a more sustainable maritime industry.”
FIATA, in its representation of international freight forwarders, of which small and medium sized enterprises (SMEs) form a significant part, welcomes the work being undertaken by the U.S. Federal Maritime Commission and the Australian Productivity Commission to publicly look into these evolving business arrangements. FIATA urges other economies to follow suit and address any implications as regards their international commitments through the World Trade Organization, including the European Commission as regards its Consortia Block Exemption.
