Rates More Volatile Since Conferences Repealed, Analyst Says

Ocean container freight rates on the Asia-Europe shipping lanes have become more volatile since the European Union outlawed liner conferences in October 2008, Alphaliner said.

The container market analyst’s findings come two weeks after EU trust busters raided the European offices of leading carriers as part of an investigation into suspected collusion over freight rates and cargo capacity.

The EU, which repealed liner conferences’ block exemption from its competition regulations, said it suspects European and Asian carriers may have violated anti-trust rules prohibiting cartel and restrictive practices and abuse of dominant market positions.

Alphaliner said its analysis of data from the China Containerized Freight Index on the Far East-North Europe trade between October 18, 2008, and 2011 showed annualized volatility of freight rates rose to 20 percent compared to 14 percent in the decade prior to the abolition of liner conferences.

The global economic crisis following the collapse of Lehman Brothers in September 2008 and the subsequent market recovery likely contributed to freight rate volatility.

“However, the termination of the block exemption seemingly contributed to the increased volatility, too,” Alphaliner said in its latest weekly report.

Rates on the non-European trades tracked by the Shanghai Shipping Exchange’s CCFI showed less volatility during the October 2008-2011 period compared to the prior decade.

“This evidence suggests that the absence of the Far Eastern Freight Conference has resulted in an increased rate volatility compared to trades which continued to enjoy anti-trust immunity.”

-- Contact Bruce Barnard at brucebarnard47@hotmail.com