Policy & Compliance
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and the Australian Productivity Commission are already publicly looking into these evolving business arrangements. BIFA has written to the UK government on this matter. Whilst BIFA can represent Members’ concerns to the UK regulators and co-ordinate action through its overseas partners, there is another option to consider. Freight forwarders have to highlight the variety and value of the services that they can offer to the client. In many ways, recent events emphasise the importance of our sector and raise questions about whether, in the long term, it is sustainable for shipping lines to provide freight forwarding and logistics services. For instance, would you as a customer want to entrust your logistics services to companies who, in part, have contributed to the recent problems in the supply chain and disrupted it so badly? The other key points to bear in mind are that freight forwarders are traditionally problem solvers and provide good service at a reasonable cost to their customers. In many cases this includes guidance that is freely given in the course of normal business trading. As one colleague observed: “I have never known a shipping line do anything for free.” That comment brings us on to the last fundamental point: the very different commercial approach of the two sectors to commercial matters. Forwarders tend to be rather more flexible and
tolerant of their customers’ financial inconsistencies than shipping lines.
commercial changes within the market that we and others believe will further reduce competition. The three largest carriers – Maersk, CMA CGM and MSC – have been buying logistics companies. Whilst this is not a breach of competition law, from the independent freight viewpoint it is an unwelcome development. However, BIFA, and at a European level CLECAT, and global level FIATA, have become aware of certain developments whereby some shipping lines are adopting policies that favour their in-house forwarders at the expense of the independent ones. It is these developments that potentially could be a breach of competition law. Priority booking slots Over a period of time, we have seen shipping lines give priority booking slots to any customer who uses the shipping line haulage to/from a port when ‘merchant’ haulage could be less expensive, although lines in the latter scenario charge lift on/lift off at ports to nullify the price advantage of using merchant haulage. Recently Members have been advising us that Maersk and Hamburg Sud have been contacting them advising that they are cancelling mutually agreed contract rates. Forwarders are being
informed that they can only book freight on a spot rate basis. These rates are inevitably more expensive than a contract rate and, given the current market position, space is often not available, making it extremely difficult for the forwarder to move the cargo. Forwarders and their national and international representatives believe that this is a distortion of the free market as ‘in-house’ forwarders owned by the shipping lines have access to much more favourable rates and space for the same traffic levels. In effect the shipping lines are breaching their neutrality as a ‘carrier’ to offer such favourable rates to direct customers and their in-house forwarding arms. Previously, traders or forwarders tendering similar traffic levels would have been treated on a broadly similar basis. There is a real concern that these developments will distort the market and independent freight forwarders will find their ability to access the market reduced and only achieved at a higher cost. The question is, what can be done? BIFA has consulted with CLECAT and FIATA and both organisations are voicing their concerns, the former with the European Commission, the latter with other jurisdictions as appropriate. We are aware that the US Federal Maritime Commission
Business impacts Importers and exporters should carefully
consider the impact on their business of, firstly, this market consolidation and, secondly, of the most recent developments initiated by Maersk. Undoubtedly the largest corporations may be beneficiaries of these changes but what about smaller traders with a few boxes per annum or who are reliant on groupage movements? A diminished freight forwarding sector will not help these businesses move the cargoes that they need to in order to survive. There is no doubt that the sector is about to face considerable change because of two specific reasons: the over-hyped word ‘digitisation’, which has never been clearly explained, alongside ‘decarbonisation’. These two forces will change the technology powering ships, communication methods between the different supply chain parties and potentially the documentation and how it moves between these parties. BIFA will represent Members’ views to government and assist them in highlighting the sector’s importance to ensure that the supply chain continues to operate.
February 2022
17
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