Importers say time to end fixed freight rate

By ROB O'NEILL

The Importers Institute is launching a campaign to end shipping price-fixing arrangements under the conference system.

Yesterday, institute head Daniel Silva issued an e-mail accusing the executives of six shipping lines of colluding to rig prices. The accusation was based on an advertisement in the Shipping Gazette notifying price increases for freight from the United States to New Zealand.

The increases are to recover rising fuel, labour and other costs, according to the advertisement.

The companies concerned are Australia-New Zealand Direct Line, Columbus Line, CMA-CGM, Contship Containerlines, P & O Nedlloyd and Wallenius Wilhelmsen Lines.

Mr Silva, who later told the Business Herald that his comments were somewhat tongue-in-cheek, said that while such price rigging was illegal under the Commerce Act for most businesses, the shipping companies had "managed to get themselves an exemption."

However, Australia-New Zealand Direct Line's New Zealand general manager, John Pascoe, said the increases were not covered by the Commerce Act.

Export cargo from the US came under the US Shipping Act.

"We find it a little disappointing that someone representing the Importers Institute would show their lack of understanding of the subject and put that into print," he said.

But he admitted increases had also occurred for outbound freight as "part of a global trend of rate recovery."

Mr Pascoe said meetings were regular and a matter of public record. Minutes, tariffs and contracts were filed with the US Federal Maritime Commission.

A shipping conference is an arrangement under which a group of shipping lines agrees on fixed freight prices and service provisions. The system has been permitted as a tradeoff to ensure full shipping service coverage.

Today there are about 350 such conferences worldwide.

"There's nothing underhand here," Mr Silva said: "All I was doing was dramatising the fact that in any other industry those guys would be in jail. But in shipping it's all okay."

Mr Silva says he has forwarded his e-mail to Commerce Minister Paul Swain and spoken to others in his ministry. He has also been speaking with other bodies such as the Retail and Wholesale Merchants and Chambers of Commerce, seeking support.

Submissions will be made to the Government for the exemption to be removed for international shipping when the Commerce Act is reviewed later this year.

"It may have made sense once, many moons ago, when we had conferences, but not any more," Mr Silva said. "Today, in the absence of conferences in the sense they existed before, it is really just being used as an instrument of collusion between shipping companies to rig prices."

Mr Pascoe said conferences allow carriers to plan long term to manage future freight requirements and deliver continuity of service.

The latest price increases add $700 to the price of shipping a 6m container from the United States to New Zealand and $1150 for a 12m container.