Shipping Pools. Refer to them as you wish: the reincarnation of a bygone shipping system, shipping economic metamorphosis, old wine in a new bottle, the 3rd way shipping method – whichever way you want, the core facts remain unchanged. Shipping pools are the Liner Conference systems all over again, right?
For a century and half or thereabouts, shipping concerns were able to arrange themselves into cartels called conferences in a bid to agree, among other things:
• the quantity of goods that could be allowed on the market at any one time
• the schedules of deliveries
• the freight rates
• the terms of contracts
• the allotments of freight to be ferried by individual ship owners (quotas)
This easy, unchallenged way of making money continued even after the birth of the mother of all supra-national policymaking institutions, the EEC, the forerunner of the EU. These cartels were exempted from all European competition laws for many years as a way of protecting the European shipping industry – a kind of bulwark against flag of convenience shipping, a way of augmenting Europe’s lost competitive edge in the global market place – a way of ensuring greater prosperity in Europe. Can you believe it? Yes. Take it from me. It is true. Shameful but true, really.
However, everything came to an end when in the wake of immense pressure from the United States and GATT, the predecessor the World Trade Organization (WTO), it suddenly dawned on the Europeans that the conferencing business model was not only utterly uncompetitive but also hugely unfair to all non European shipping companies and all non European consumers, especially those in dirt poor developing countries. Hence, under EU guidance, the Liner Conference system was faced out slowly and finally prohibited on 17 October 2008. It was said then that a breach of the prohibition would result into hefty fines, anything up to and beyond a shipping company’s global one year profits.
Gee. How did the ending of the Conference impact European ship owners? How did it impact freight rates and surcharges worldwide? What about service levels – did they go up or down? It is reasonable to wonder if someone has ever incurred the wrath of the EU, right – and how much was the penalty? How did it impact regional port throughputs? What about impoverished states – how did the end of the Conference impact them? Be a good maritime student. Find out on your own. Every good admiralty and maritime law guide published after 2008 have answers to these questions.
Tell me. How are liner conferences different from shipping pools? Are they one and the same animal? What are shipping pools, anyway? Read my next piece to find the answers to these hot questions.
Gola Traub, MA International Maritime Policy Student