Mumbai: A group of 19 container shipping firms that operates between Europe and the Indian subcontinent has complained of a dichotomy between two arms of the Union government in rules proposed for setting freight rates for moving goods from and into India.
“There is a conflict of interest between the shipping ministry’s plan to have a shipping trade practices Act and the role of the Competition Commission,” said Rod Riseborough, chief executive of the London-based Indian, Pakistan, Bangladesh, Ceylon (IPBC) Conference.
Changing practices: Container ships berthed at the JN Port in Mumbai
“While the shipping ministry wants to regulate the service providers in the shipping trade to help the shippers, the Competition Commission favours a free market where the rates will depend on the demand and supply situation.”
A liner conference, such as the IPBC Conference, is a group of container shipping firms offering equitable freight rates, standardized shipping practices, and regular scheduled services between designated ports.
Member liners of such conferences agree on freight rates irrespective of market conditions, a decision that is acted upon by all the members. The draft Bill on shipping trade practices wants service providers to publish charges and furnish a break-up of such charges to the shipping ministry or an agency authorized by it.
The Competition Commission, in contrast, favours a regime of market-linked rates driven by market demand.
The Bill is pending with the Union law ministry ahead of being introduced in Parliament.
Riseborough told Mint on a recent visit to Mumbai that the IPBC Conference will meet the Competition Commission shortly to point out this potential conflict of interest between two wings of the government.
Exporters, meanwhile, are keenly awaiting the new shipping trade practices law. “We feel that the proposed shipping trade practices Act must come soon,” said Asad Wasi, executive secretary, Northern India Shippers’ Association, adding that practices currently followed by the shipping trade needed an overhaul.
Such exporters have for long complained that service providers charge exorbitant rates. Apart from shipping lines, service providers in the shipping trade includes cargo consolidators, freight forwarders and custom house agents, among a host of others.
“The worst affected are the small exporters or shippers who are at the mercy of buyers. They can only use those service providers who are nominated by the buyers,” said Wazi.
The IPBC Conference will cease to exist from October next year as the European Commission has decided to repeal the antitrust immunity given to such groups operating from Europe.
Liner conferences were given anti-trust immunity under the Shipping Act of 1984, a US congressional legislation that set regulations for the ocean transport industry that has been adopted by other countries or groups of countries.
India’s Competition Commission, too, prohibits shipping conferences.
“Under our Act, there is no exemption to shipping conferences. They will have to stop the practice of coordinating freight rates and other supplementary charges,” Vinod Dhall, acting chairman, Competition Commission of India, had said earlier this month.