Home / Industry News / Anti-cartel legislation good for Kiwi exporters

 

JULIE ILES

Last updated 10:56, August 20 2017

BECK DIEFENBACH/REUTERS

While the global shipping industry has seen massive consolidation, the ships are getting larger.

Anti-cartel legislation has removed international shipping liners previous exemption from New Zealand’s commerce watchdog.

But a last minute change the the amendment to the Commerce Act granted them left wiggle room for international shipping companies to continue cutting costs by sharing vessels.

Shipping companies are still able to exchange, sell, hire or lease space on international liners under the law, according to counsel at Chapman Tripp law firm.

CAREN FIROUZ/REUTERS

New legislation gives exporters the right to complain to the commerce commission if shipping liners are engaging in anti-competitive behavior.

The New Zealand Shippers’ Council chairman Michael Knowles estimated four to five shipping companies would operate one service and share spaces on each other’s ships.

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He welcomed the legislation, having lobbied for the exception, and said the previous regulation was “toothless” and allowed shipping companies to fix prices, collude, and engage in anti-competitive behaviour. 

“Shipping was the only major industry that was outside of the Commerce Commission’s rules so now that’s changed.”

“It’s future-proofing in an environment where there’s been massive consolidation.”

Knowles said the number of international lines has shrunk from about 20 to 12 over the past four years, with another possible two liners being “taken down” in the near future. 

He said it was because the shipping companies had been losing a lot of money and they needed to control capacity.

Commercial appliance exporter Guy Stewart said there was “limited choice” when it came to shipping across the Tasman, but with shipping to Singapore and China there was more choice. 

Stewart is the managing director of export company Skope Industries.

“Most ships will come to New Zealand full and return empty,” Stewart said.

The coordination of shipping companies minimises the amount of empty space on ships coming in and out of New Zealand harbours, ultimately saving companies money on the cost of transport and piracy-prevention measures. 

In 2016, Ocean’s Beyond Piracy estimated the global cost of piracy was about $1.7 billion. The shipping industry bore roughly 80 percent of those costs, the group’s analysis showed.

Over the last six months there have been 87 armed piracy attacks on ships worldwide, with instances highest in Singaporean waters. Piracy has been steadily shrinking as more money and resources have gone towards combating it, though the cost to mitigate risk remains high.

While the $500 billion global shipping industry is seeing a massive consolidation, the mammoth container ships transporting $7 trillion dollars of goods around the globe are getting larger. 

Asia’s largest container line, Chinese company Cosco Shippings Holdings has said it would pay over $6 billion for its largest national rival, a company famous for owning the world’s largest vessel, a carrier more than twice as long as Auckland’s Sky Tower.

Official figures show export numbers in New Zealand have steadily declined from 13,305 in 2012 to 11,898 at the end of 2106, a decrease of 11 percent.

Though certain industries are optimistic as their products gain value. 

A Ministry for Primary Industries report expects export prices to continue to improve due to growing demand in the seafood sector. 

Seafood New Zealand predicts exports will hit a record $2 billion annually by 2020. 

Knowles said rates for New Zealand exporters were “probably at an all time low” which he said was a prolonged product of the global financial crisis when global trade “collapsed”.

“The Shippers’ council does support having sustainable shipping practices, but we also want the right to complain against anti-competitive behaviour, same as any other business.”

Knowles said the last minute changes had been “critical” for members. 

“We are delighted that the Bill, now finally passed…[provides] protection from anti-competitive behaviour without dismantling those practices that are vital to the smooth and efficient operation of the shipping industry.”

 
 
 
 
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