Government probe needed into container shipping market competitiveness, trade body argues

Fri 7 Jan 2022
Posted by: Noelle McElhatton
Trade News

The government is being asked to investigate the state of competition within the global container-shipping market, as transportation costs remain high into the third year of the pandemic. 

In a letter to transport minister Robert Courts, the British International Freight Association (BIFA) has expressed concern that the past two years have seen “huge market consolidation” and “blatant profiteering” by shipping companies, distorting the market.

BIFA director general Robert Keen said that since 2015, the number of major container shipping lines had shrunk from 27 to 15.

“The pandemic has highlighted and accelerated this development, which has also contributed to dreadful service levels, and hugely inflated rates, with carriers allocating vessels to the most profitable routes with little regard to the needs of their customers,” he said.

Competition concerns

According to the Loadstar, BIFA is the latest organisation to raise competition concerns with regulatory authorities following investigations by the US Federal Maritime Commission (FMC) and a letter from European freight forwarders’ association Clecat to the EC Competition Commission in October.

Meanwhile, Maersk has been overtaken as the world’s biggest container shipping company by MSC, reports the Economic Times. Both companies have a 17% share of the market with MSC just nudging ahead on capacity. 

The Danish shipping giant recorded record revenue in Q3 2021 of $16.6bn, up 68%.

Ikea passes cost increases to consumers 

Another Scandinavian company, Ikea, is having to raise prices to consumers as the average supply chain cost increase across the group hits 9% globally, reports Logistics Manager.

The BBC reports that Next and Greggs are also raising prices due to higher wages and production costs. 

UK inflation is nearing 6%, reports Sky which says that the PM was caught out at PMQs claiming that he never declared inflation fears were “unfounded”. 

In the eurozone, inflation hit its highest ever level of 5% in December, reports the Guardian.

Firms are passing on their costs to consumers while the European Central Bank struggles to meet its 2% inflation target.