Exporters and consumers will suffer greater price instability and higher shipping costs if the shipping competition exemptions provided under Part X of the Competition and Consumer Act are removed.
Comments made by ACCC Chairman Rod Sims, in a speech at Adelaide University last Friday bundled all shipping reforms into the ‘low hanging fruit’ basket. “This is completely naïve,” Shipping Australia CEO, Rod Nairn said.
The competition review made two completely separate recommendations with regards to shipping: to remove cabotage restrictions for coastal shipping, and to repeal Part X of the CCA and provide a block exemption for liner shipping agreements that meet certain pro-competitive rules. While Shipping Australia Limited supports the easing of cabotage restrictions, we are strongly opposed to meddling with the Part X exemptions that have been proven, over time, to provide a stable and competitive international shipping environment. However, neither of these recommendations is simple, either in terms of policy or implementation.
Mr Sims’ statement that “the shipping reforms are low-hanging fruit that can be quickly implemented” just shows that he either doesn’t understand shipping or that his idée fixe on the removal of Part X makes him blind to the facts that the current Part X exemptions are providing an extremely competitive shipping environment.
Part X provides legislative certainty, high levels of participation in shipping services to and from Australia and consistently low shipping rates for exporters and importers.
“Mr Sims has repeatedly issued statements lacking in substantial evidence, in support of his personal quest. Such statements are misleading and do not contribute to balanced public debate. It is unethical and unfair that someone in such a responsible position as Mr Sims, continues to make unsubstantiated and misleading statements”, Rod Nairn said.
The broader global shipping recognises the importance of shipping exemptions, and even though the EU prohibited shipping conferences in 2008, they have continued block exemptions for consortia, and recently extended this exemption for another 5 years.
A US Federal Maritime Commission study aimed at determining the impact of the EU’s 2008 conference prohibition concluded that the repeal of the block exemption has not resulted in any relative decline in EU freight rates compared with Far East/US trades, and observed that there appears to have been a comparative increase in rate volatility in EU/US trades (www.fmc.gov/assets/1/Documents/FMC_EU_Study.pdf).
“Mr Sims is quick to ask, ‘I’d like to know what problem they are trying to fix’ when it comes to the Competition review panel recommendations that the ACCC should be split into two parts, but he is on a crusade to destroy a perfectly good shipping competition regulatory environment, without any justification. I’d like to know what problem he is trying to fix!
“Just how much additional compliance cost he wants to place on business and how much tax payer funded bureaucracy he wants to grow so that he can hold tightly onto the reigns, is hard to say. But it will certainly increase costs to exporters and consumers”, Rod Nairn said.
For additional information contact Rod Nairn, chief executive officer on 0449 902 457.
Shipping Australia is a peak national shipping association comprising 34 member shipping lines and shipping agents that would be involved with over 70 per cent of Australia’s container and car trade, over 60 per cent of our break bulk and bulk trades, and significant cruise ship and tug operations.