A part of Watch Media

ShippingWatchSunday29 January 2023

  • Search
  • Log in
  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Search
  • Log in
  • Latest
  • Search
  • Log in
  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Offshore
  • Ports
22/12/2014at 12:02

EU will keep a close eye on Maersk Line and MSC

The EU's new Commissioner for Competition, Margrethe Vestager, will keep a close eye on the new mega-alliances in the container industry, including 2M, which is set for launch one week from now. And she is ready to strike again if necessary, she says in an interview with ShippingWatch.
Photo: Niels Hougaard
BY TOMAS KRISTIANSEN

Even though the EU was not required to formally approve the new 2M alliance between the two biggest container carriers in the world, Maersk Line and MSC, there should be no doubt that the EU Commission is prepared to strike if 2M or one of the other major alliances interfere with free competition, says the EU's new Commissioner for Competition, Margrethe Vestager, in an interview with ShippingWatch. She calls on shippers and other industry players to pay attention and notify the EU if they suspect something is amiss.

Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

The former leader of the Danish Social-Liberal Party (Radikale, B) has been appointed to the key EU job at a time when a vast majority of global container transport has concentrated its activities into four large-scale alliances, of which 2M is the biggest, not least on the main trade between Asia and Europe. 2M will be launched around one week from now, on January 1st, and the alliance will be fully implemented during the first quarter.

Scrutinizing every concern

"The Commission will continue to monitor developments in the container industry and will scrutinize every concern relating to interference with competition that the Commission discovers on its own or which is reported. It goes without saying that the Commission is in frequent contact with players - carriers, customers, ports, etc., - and I'm sure that they won't hesitate to notify us about cases that interfere with competition which they feel need to be investigated further," she says.

SeaIntel: Two alliances to compete on ULCCs in 2015

As opposed to well-known high profile cases such as the dispute with US-based Google, Margrethe Vestager's role as watchdog in the container market will very much be a balancing act between, on the one hand, having to plead for the free market forces while on the other hand approving substantial financial schemes benefiting the industry.

As such, the EU Commissioner for Competition is also responsible for frequently approving the tax benefits that the industry enjoys. These include the tonnage tax scheme which has been adopted by a majority of EU member states in order to provide carriers with tax benefits, and it includes the net wage scheme, which ensures that carriers only have to pay net wages to employees on ships, and thus avoid having to pay public tax for employees.

No alternatives

But there are arguably no alternatives if EU countries such as Denmark want to maintain their own registered fleet while still employing local seafarers on the ships, as there is quite simply too much competition from countries offering flags of convenience, just as it is too difficult to compete with wages from Asian countries in particular. As such, Vestager does to intend to change the possibility of securing tonnage tax and net wages, she says.

Swedish tonnage tax fades in political chaos

"The purpose of these schemes is to support EU countries' competitiveness in the global shipping industry. EU-registered ships have been looking toward flags of convenience, which provide more favorable conditions to shipowners than they would get with EU-registration in terms of taxes, costs, control of social legislation, safety and environmental regulations. In order to stop this out-flagging, ensure employment for EU seafarers and to strengthen the fleet's competitiveness, the EU Commission has adopted concrete state aid schemes such as tonnage tax and net wages to help reduce employment costs. Seeing as there's still fierce competition in the industry, the EU has no plans to eliminate rules concerning tonnage tax and employment of EU seafarers," says Margrethe Vestager.

Chinese stat aid for scrapping

The European container industry's competitors include state-owned Chinese carriers such as Cosco, and state involvement in the transport chain as a whole represents a general concern for EU carriers.

Recent criticism has been directed at China's decision to support Chinese carriers' scrapping of ships on Chinese yards. The Chinese government itself has also started to increasingly flex its muscles toward the international container industry.

One example of this was six months ago when China rejected the P3 alliance and definitively derailed the collaboration between the three biggest - and European - container carriers in the world: Maersk Line, MSC and CMA CGM. And there is thus no way to avoid China in the efforts to ensure an efficient as well as competitive container industry.

Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

"The Commission is aware of this and is in frequent contact with the Chinese authorities concerning shipbuilding, including state aid schemes, though it goes without saying that these kind of negotiations take time. But if it becomes necessary, there are international tools for trade conflicts at our disposal," says Vestager.

Investigations take time

When it comes to making carriers behave, the EU Commission has shown in the past that it is not afraid to strike. The last time this happened on a large-scale was when officials from the Commission performed a dawn raid at 14 container carriers, including Maersk Line, in May 2011.

The case against the carriers was launched formally last year, in November 2013, and the investigation has been underway since then. The point of contention concerns the container carriers' announcements of general rate increases (GRI), which usually lead competitors to make similar announcements to customers once one carrier has decided to raise its prices.

Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

A carrier such as Maersk Line is cooperating but, according to ShippingWatch's sources, the carrier - along with several of the other carriers involved - is also somewhat displeased with the fact there is still no analysis of the dispute at this time, three and a half years after the raid. But there is really no other way to do it while also ensuring a thorough review of the seized documents, explains Margrethe Vestager.

"Even though there are many parties involved, and that this represents a significant challenge for the Commission's investigation, we are doing the best we can to investigate this matter as quickly as possible while also ensuring a quality investigation, as well as making sure that the various parties' rights are respected."

Denmark wants to regain Top 5 on gross tonnage

Maersk Line gets 78 ports in East-West network in 2015

Skou: Maersk Line and MSC must be equally reliable

European shippers in strong critique of alliances 

Related articles:

  • Denmark wants to regain Top 5 on gross tonnage

    For subscribers

  • Photo: Leth Suez

    Maersk Line gets 78 ports in East-West network in 2015

    For subscribers

  • Photo: Carsten Bundgaard

    Skou: Maersk Line and MSC must be equally reliable

Sign up for our newsletter

Stay ahead of development by receiving our newsletter on the latest sector knowledge.

!
Newsletter terms

Front page now

Photo: Höegh Autoliners
Carriers

Car carriers have rarely seen such profits: "We are probably at an all-time high"

After a difficult time during the pandemic, 2022 has exceeded all expectations for car carriers, says chief exec of Höegh Autoliners. Low capacity and electric cars out of China are main factors in elevating prices.
  • Norwegian carrier lands another large gas deal with Germany
  • Höegh Autoliners joins climate coalition

For subscribers

Photo: Markus Scholz/AP/Ritzau Scanpix
Container

Maersk rebrands Hamburg Süd and several other well-known subsidiaries

For subscribers

Photo: Ints Kalnins/Reuters/Ritzau Scanpix/REUTERS / X02120
Tanker

Fredriksen now owns nearly as many Euronav shares as the Saverys family

For subscribers

”Blue Water wants to grow – but it will be with a focus on profitable growth, and we will hold on to our strong values, unique customer focus and high level of satisfaction among both customers and personnel,” states Kurt Skov, founder and departing chair at Blue Water Shipping. | Foto: Carsten Andreasen/Ritzau Scanpix
Logistics

Blue Water founder promises future "focus on profitable growth"

For subscribers

Foto: Tatiana Meel/Reuters/Ritzau Scanpix
Regulation

EU considers capping Russian fuel prices at USD 100 a barrel

For subscribers

Photo: Statoil/AP/Ritzau Scanpix
Offshore

Borr Drilling raises USD 400m to pay off debt

For subscribers

Further reading

Photo: Höegh Autoliners
Carriers

Car carriers have rarely seen such profits: "We are probably at an all-time high"

After a difficult time during the pandemic, 2022 has exceeded all expectations for car carriers, says chief exec of Höegh Autoliners. Low capacity and electric cars out of China are main factors in elevating prices.

For subscribers

Chief execs of Maersk and MSC, Vincent Clerc and Søren Toft, acknowledges that much have changed for the carriers since launching the 2M alliance. For that reason, the partnership is now ended. | Foto: Jacob Gronholt-pedersen/reuters/ritzau Scanpix og Jason Decrow/ap/ritzau Scanpix
Container

End of 2M alliance could trigger a domino effect

A new reality on freight markets and a need for fewer ties could be main reasons behind MSC and Maersk terminating their partnership. More alliance dissolutions could be coming, according to shipping analyst.

For subscribers

Photo: Markus Scholz/AP/Ritzau Scanpix
Container

Maersk rebrands Hamburg Süd and several other well-known subsidiaries

Hamburg Süd will lose its company name and gradually be integrated into the Maersk brand. A number of other subsidiaries face rebranding as well.

For subscribers

Latest news

  • Blue Water founder promises future "focus on profitable growth" – 27 Jan
  • Borr Drilling raises USD 400m to pay off debt – 27 Jan
  • Income for ice class tankers has surged by 1,644 percent following sanctions – 27 Jan
  • Floating power station to provide energy for one million Ukrainians – 27 Jan
  • Maersk rebrands Hamburg Süd and several other well-known subsidiaries – 27 Jan
  • Car carriers have rarely seen such profits: "We are probably at an all-time high" – 27 Jan
  • Fredriksen now owns nearly as many Euronav shares as the Saverys family – 27 Jan
  • EU considers capping Russian fuel prices at USD 100 a barrel – 27 Jan
  • New partnership to investigate potential human rights abuse at sea – 27 Jan
  • Singaporean competition authorities to probe DSME sale – 27 Jan
See all

Jobs

  • Foundation Package Manager - Offshore wind industry

  • Copenhagen Shipping Company is hiring a skilled cargo broker

  • Junior Finance Business Partner - offshore wind industry

  • Chartering Manager for Lauritzen Bulkers A/S

  • Financial Controller for International Shipping Company

  • Senior Lead, Human Sustainability at Sea

Jobs

  • Foundation Package Manager - Offshore wind industry

  • Copenhagen Shipping Company is hiring a skilled cargo broker

  • Junior Finance Business Partner - offshore wind industry

  • Chartering Manager for Lauritzen Bulkers A/S

  • Financial Controller for International Shipping Company

  • Senior Lead, Human Sustainability at Sea

See all jobs

Colophon

ShippingWatch
Search

Sections

  • Carriers
  • Logistics
  • Regulation
  • Suppliers
  • Offshore
  • Ports
  • Sitemap
  • RSS feeds

Editor

Tomas Kristiansen

tk@shippingwatch.dk

Tel.: +45 3330 8360

Editor-in-chief

Anders Heering

Publisher

JP/Politiken Media Group Ltd

Advertising

annoncering@infowatch.dk

Tel.: +45 7077 7445

Advertising

Job Advertising

job@infowatch.dk

Tel.: +45 7077 7445

Jobs

Subscription

Try ShippingWatch or get an offer for a subscription meeting the exact needs of you or your company.

shippingwatch@infowatch.dk

Tel.: +45 7077 7445

Learn more about subscriptions here

Address

ShippingWatch

Rådhuspladsen 37

1785 Copenhagen K, Denmark

Tel.: +45 3330 8360

Guidelines

  • Privacy Policy

Copyright © ShippingWatch — All rights reserved

Microsoft is in the process of discontinuing Internet Explorer – and so are we.
For a better experience, we recommend using one of the following browsers.

Kind regards,
ShippingWatch

Google ChromeMozilla FirefoxMicrosoft Edge