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May 11, 2021 at 6:26 PMThe performance of maritime supply chains is crucial for the global competitiveness of the industrial, trade, and logistics location. For this, all stakeholders need a balanced legal framework that ensures horizontal and vertical competition equality for shipping companies, ports, seaport operations, freight forwarders, and the shipping economy, warns the DSLV Federal Association of Freight Forwarding and Logistics on the occasion of the National Maritime Conference (May 10 and 11, 2021).
(Berlin) “The current legal framework conditions are not balanced. They contribute to competitive distortions,” criticizes Willem van der Schalk, chairman of the Committee of German Seaport Forwarders in DSLV, referring to the existing system of tonnage tax and the EU block exemption regulation for maritime shipping consortia.
Tax Inequality
It is unacceptable that tax reliefs, which are actually intended to stabilize the market position of European shipping lines in international competition, are now being used by large container shipping companies to deliberately push freight forwarders out of the hinterland markets. In more and more EU countries, shipping companies are also organizing the hinterland supply chains, including terminal services, land transport, and storage, as so-called door-to-door services themselves – with a tonnage tax rate of only seven percent. This puts them in direct competition as supply chain organizers with freight forwarders, who are subject to an effective corporate tax rate of 27 percent. The Organization for Economic Cooperation and Development (OECD) has already pointed out this competitive distortion. Van der Schalk states: “The European Commission must ensure that the low tonnage tax rate remains limited to the operation of a seagoing vessel and cannot be extended to non-shipping services.”
European Competition Law Does Not Restrict Shipping Companies’ Market Power
The competitive imbalance is further exacerbated by the concentration on the supply side. European competition law does not restrict the dominant market power of shipping alliances – on the contrary: the European Commission extended the block exemption regulation (BER) EC 906/2009 for maritime shipping consortia by another four years in March 2020. As a result, container shipping lines remain exempt from the general prohibition of cross-company and competition-restricting agreements and behaviors. The supply of container shipping has now narrowed down to nine shipping companies that have formed three globally operating alliances and currently control about 86 percent of the world’s container volume. This supply oligopoly faces growing demand, and sea freight rates remain at exorbitantly high levels.
“Germany and the EU Must Act”
“It is not unusual for markets to shift and prices to rise with spikes in demand,” says van der Schalk. “However, I doubt that the sea freight market as a whole is still functioning.” The maritime sector is viewed too one-sidedly by politics through the lens of the shipping industry, which overlooks that freight forwarding companies and seaport operations control a significant share of maritime logistics processes. From an EU perspective, it is correct to retain maritime know-how in Europe through favorable framework conditions. However, it is unacceptable if one-sided privileges lead to competitive distortions in the entire European goods transport sector. Van der Schalk: “Germany and the EU must act. It is to be hoped that the National Maritime Conference will still provide impulses for this.”
Photos: © Pixabay/Loginfo24
