Shipping Australia has said that vessel-sharing agreements (VSAs) benefit Australia, which is a small but high-cost market.
The association said that VSAs encourage smaller box lines to call at Australia by pooling ships with other players, thus helping to reduce their costs while facilitating trade flows to the country.
VSAs have been in the spotlight since the European Commission decided not to renew antitrust exemption for liner shipping consortia on 11 October. In Australia, liner operators can be granted a partial and conditional exemption from various parts of the general competition law, subject to registering their shipping agreements with the Registrar of Liner Shipping (part of the Department of Infrastructure) and after consulting shippers.
Shipping Australia said, “So instead of one company committing to, say, one ship once a month, there could instead be four companies committing one ship each so there are four ships a month and one of which calls every week. Vessel Sharing Arrangements (VSAs) make shipping services cheaper, and more frequent.
“We saw this during the recent Covid-19 period. When freight rates were high, it attracted small players to add vessels (and therefore capacity) to Australia. When freight rates fell, the smaller players removed capacity. Tailoring capacity levels to price and customer demand is the exactly how contested markets are supposed to work.”
The association said that liner operators should be praised for finding solutions, instead of just withdrawing from a market.
Shipping Australia noted, “It’s easy to imagine the disruption, frustration, upset, and economic consequences, if shipping companies just pulled out of the Australian market without having anyway to ease the burden on their customers. Yet another reason why Australia has – and should continue to have – access to VSAs.”
Martina Li
Asia Correspondent
