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Asia-north Europe rates grew volatile since 2008 EU conference ban

2011-06-01 00:00:00

FREIGHT rate volatility on the Asia to north Europe trades has increased since the European Commission banned the Far Eastern Freight Conference (FEFC) by repealing its block anti-trust exemption in October 2008, says new research.


Since then, Asia-north Europe trades have experienced rate volatility in a 20 per cent range every year compared to an annual average of 14 per cent fluctuation over the previous 10 years before the ban, say Alphaliner researchers.


"Rates on the non-European trades tracked by the CCFI [China Containerised Freight Index], trades which retained conference immunity, showed less volatility during the October 2008-2011 period. This evidence suggests that the absence of the Far Eastern Freight Conference has resulted in an increased rate volatility compared to trades which continued to enjoy anti-trust immunity," said the Alphaliner report.


Said Hapag-Lloyd: "The major EU trades have experienced more rate volatility over the past two years than the major non-EU trades. We believe this relates at least in part to the stabilising influence that comes from carriers being able to share market information and discuss general rate trends and establish voluntary rate guidelines."


Said Maersk: "While the EU conference block exemption was in place, Maersk did not necessarily offer the same pricing as the FEFC. Competitive pressure and less-than-full vessel utilisation levels forced rates from US$2,150 per TEU in March 2010 to $880 per TEU currently. This rate erosion has occurred despite the significant increase in operating costs over the same period due to the rise in fuel costs."


Said "K" Line: "Yes [the FEFC had an impact] in terms of information exchanges especially concerning supply demand predictions, allowing better utilisation and helping to maintain a more efficient service."


Said non-conference member Evergreen: "The FEFC served as a discussion platform for conference carriers to discuss market conditions in that trade and allowed independent carriers to have an insight as to how the FEFC members were reacting to such conditions."
(Source:http://www.schednet.com)