MOL quits Pacific agreements

Janet Porter, Mike Grinter and Sandra Tsui - Wednesday 29 October 2008
JAPANESE line MOL is quitting two discussion agreements covering the Pacific trades rather than risk legal challenges following the end of conferences in Europe. Mitsui OSK Lines president: Akimitsu Ashida said the company would resign from the Transpacific Stabilization Agreement and the Canada Transpacific Stabilization at the end of November. “With the European Union’s abolition of liner antitrust immunity, it has become extremely difficult to align the business processes of our entire organisation when its regional divisions must operate to differing standards,” Mr Ashida continued. The TSA and CTSA differ from price-setting conferences by not having a common tariff, although they will issue recommended rate increases. Fifteen ocean carriers are members of the TSA which describes itself as research and discussion forum for major container shipping lines serving the trade from Asia to ports and inland points in the US. Almost all the top lines currently belong, with the exception of Maersk that left some time ago and reaffirmed recently that it saw “no value” in membership that was “very time consuming”. Neptune Orient Lines chief executive Ron Widdows is current chairman of the TSA, but is likely to hand over to another senior executive before the end of the year. Some lawyers have warned that membership of the TSA could potentially create legal problems for lines that also serve Europe where conferences were formally outlawed earlier this month, should there be any suspicion that discussions had broadened beyond the Pacific trades. “Having done a thorough analysis of marketplace dynamics and the roles of TSA/CTSA relative to our unique ability to differentiate, we concluded MOL and its customers would be better served by conducting business independently from transpacific liner agreements,” said Masakazu Yakushiji, executive vice president of MOL. MOL has been a member of TSA and CTSA since they were formed 1989, but resigned from the westbound discussion agreements in June 2005. Hiroki Tsujii, manager of strategic planning at MOL, told Lloyd’s List: “At a staff level we are concerned that our Asian based sales team should adhere to one standard. Currently the sales staff in Asia conduct business on trade from Asia to the US and Europe. If they are allowed to consult with other shipping lines when it comes to business to the US the temptation may be there to talk to the same shipping companies over business to Europe.” Some legal experts have warned in the past that even though the TSA covers a trade lane on the other side of the world from Europe, that would not necessarily protect it from scrutiny by Brussels. European Union law applies to any agreement that could be regarded as anti-competitive. TSA lines, all of which have a presence in Europe-Asia and transatlantic trades as well, could find themselves under investigation if information they acquired during the course of a routine meeting about the transpacific trades had a subsequent bearing on behaviour elsewhere in the world. Capacity could be shifted from one route to another, for example, due to what is learned about conditions on the Pacific. A large number of ships have been moved from Pacific to Asia-Europe routes over the past year as one trade lane weakened before the other.
Several other members of the TSA, including Yang Ming Marine, China Shipping, Cosco and Evergreen all told Lloyd’s List that they have no plans to withdraw from TSA at present.