Tuesday , 19 June 2018
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Carriers respond to European Commission’s pricing concerns
The European Commission is concerned over price announcements

Carriers respond to European Commission’s pricing concerns

Fifteen of the biggest shipping lines have offered to reform the way they announce price changes.

The carriers have agreed to stop publishing and communicating general rate increase (GRI) announcements. GRI announcements are defined as announcements of intended changes to the price, expressed solely as an amount or percentage of the change.

The European Commission had warned that it is concerned that these announcements may be anti-competitive and in breach of European Union antitrust rules.

In a statement, the Commission said: “These price announcements, do not indicate the fixed final price for the service concerned but only the amount of the increase in US$/teu, the affected trade route and the planned date of implementation. They generally concern sizeable increases of several hundred US dollars per teu.”

GRI announcements are typically made three to five weeks before their implementation date and the Commission is concerned that, during those weeks, other carriers announce similar measures.

“Announced GRIs have sometimes been postponed or modified by some carriers, possibly aligning them with the GRIs announced by other carriers,” the Commission said in a statement.

As well as ceasing GRI announcements, carriers will increase pricing transparency by breaking down their prices into at least the five main elements of the total price: base rate, bunker charges, security charges, terminal handling charges and peak season charges.

Any such future price announcements will be binding on carriers as maximum prices for the announced period of validity. However, carriers will still be able to offer prices below the announced price.

On top of this, price announcements will not be made more than 31 days before their entry into force. This is because this is the period in which shippers usually start booking significant volumes.

There are two exceptions to these rules. The first is in communications with purchasers who, on that date, have an existing rate agreement in force on the route to which the communication refers.

The second is for communications during bilateral negotiations or communications tailored to the needs of specific identified purchasers.

These commitments offered by the carriers would apply for a period of three years. Comments from interested parties can be submitted to the Commission.

The fifteen carriers are: China Shipping, CMA CGM, Cosco, Evergreen, Hamburg Sud, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, Maersk, MOL, MSC, NYK, OOCL, UASC and Zim.