EU exemption for container vessel-sharing arrangements continues

The European Commission on March 24 published a final rule extending its existing block exemption regulation that allows for vessel-sharing among ocean container carriers for another four years.

The commission said its recent evaluation of the block exemption concluded that vessel-sharing among carriers is “still fit for purpose,” if these individual arrangements do not exceed 30% of market share.

“More specifically, the commission has found that the Consortia Block Exemption Regulation results in efficiencies for carriers that can better use vessels’ capacity and offer more connections,” the European Commission said in a statement.

“The exemption only applies in consortia with a market share not exceeding 30% and whose members are free to price independently,” the commission added. “In that context, those efficiencies result in lower prices and better quality for consumers.”

The commission said its evaluation of both carrier and shipper costs per TEU has shown a 30% decrease overall, while “quality of service has remained stable.”

The Washington, D.C.-based World Shipping Council, whose carrier members account for more than 90% of the international container trade, applauded the European Commission’s decision.

“Vessel-sharing is the backbone of the global liner shipping network,” said John Butler, the World Shipping Council’s president and CEO, in a statement. “We should not underestimate the value of this tool for smaller carriers and lower volume trade lanes where demand might not otherwise support as many competitors.”

The Consortia Block Exemption Regulation was adopted by the European Union in 2009 and extended unchanged by the commission in 2014 for five years, expiring April 25, 2020. The latest extension of the regulation is valid through April 25, 2024.

During its latest evaluation of the block exemption regulation for vessel-sharing arrangements, which started in September 2018, the commission said it “included a wide consultation of stakeholders in the maritime liner shipping supply chain” and found no detrimental effects in the market for its continuation.

However, many container shipper groups, such as the European Shippers’ Council, Global Shippers Alliance and Global Shippers Forum, disagreed with the commission’s conclusion that the EU block exemption for vessel-sharing arrangements benefits shippers and want it terminated.