Geneva, 12 October 2023 – FIATA, the International Federation of Freight Forwarders' Associations, welcomes the European Commission's decision not to extend the Consortium Block Exemption Regulation (CBER), which is due to expire in April 2025. The expected benefits of CBER are no longer provided
Established in 2009, CBER allowed liner shipping operators with a combined market share of less than 30% to cooperate and provide shared transport services. This aims to create efficiencies that benefit other members of the supply chain and consumers. However, feedback received by FIATA indicated that freight forwarders did not benefit from the expected service efficiencies and consumers did not experience significant cost savings. Concerns have been raised about the increased risk of unfair market conditions under CBER, which FIATA has previously stated is no longer fit for purpose in the current situation of market concentration and vertical integration.
Notably, FIATA believes that the CBER, which aims to optimize port-to-port services, does not take into account the evolution of the market towards vertical integration by ocean carriers to also cover inland transport. In addition, the effect of alliances and consortia seems to have been insufficiently taken into account in the framework of traditional indicators of market concentration applied to the container shipping sector, which requires a new approach.
Advocacy for change
Given the importance of CBER and the risks associated with market competition conditions, in July 2022 FIATA together with nine trade bodies, CLECAT, FEPORT, GSF, ESC, EBU, ETA, UIRR, IAM and FIDI actively sought CBER reform . The group represented cargo owners and freight forwarders, port terminal operators and other parts of the supply chain dependent on container transportation. CLECAT, FIATA and GSF have also collaborated on a paper citing reasons and ways to reform the EU CBER if it remains in place, stressing that the provision in its current form is not fit for purpose.
FIATA has consistently called for proper attention in recent years, regardless of the pandemic and stressful circumstances, as it has exposed weaknesses in the supply chain. It also highlighted the impact of the profits generated during this period in facilitating vertical integration and presented extensive evidence gathered by its dedicated Global Maritime Task Force on unfair practices caused by such integration. The evidence also related to the unsatisfactory level of service that its members experienced during the pandemic.
FIATA notes that the Commission took a year to consider its announcement after completing the review process, which took place in August-October 2022. FIATA welcomes the Commission's broad reasoning in its Staff Working Document (SWD), which reflects the fundamental views and concerns of many maritime supply chain stakeholders that CBER no longer promotes competition in the shipping sector and does not result in any appreciable efficiency gains for users of the system. These findings were consistent with evidence gathered by FIATA's dedicated Global Maritime Working Group, established under the auspices of the FIATA Working Group on Unfair Supply Chain Practices.
"Freight forwarders play a significant role in the market and are also users of the transport system, where they are in direct competition with the carriers who act as their service providers. FIATA welcomes the Commission's recognition of freight forwarders as important actors in the supply chain in its CBER consultation and Staff Working Paper. This is the key role of freight forwarders in ensuring access and efficiency in the movement of goods." - Dr. Stephan Graber, CEO of FIATA
Fair competition in the future
FIATA recognizes that the expiry of the CBER does not mean that consortia are banned in the EU. He understands that any possible consortia in the future will be subject to increased supervision based on EU antitrust rules that apply to all other economic sectors. This will allow the Commission to take into account the new norm in the market, taking into account the vertical integration of certain carriers and the heterogeneity of size of other stakeholders and carriers.
FIATA agrees with SWD and concludes: “Overall, it appears that in order to restore the trust between stakeholders necessary to build a sustainable, integrated and efficient supply chain, it is necessary to ensure that the liner shipping sector is not perceived as subject to less scrutiny by antitrust authorities. law enforcement officers than other industries."
FIATA emphasizes that shipping is a global industry and calls for a unified and coordinated approach between authorities to ensure effective regulation of the industry. FIATA will continue to seek a collaborative approach, facilitating dialogue between supply chain stakeholders to build the much-needed trust to achieve a fair and efficient supply chain.