Singapore shipowners welcome extension to shipping block exemption

Singapore’s ministry for trade and industry has extended the Competition (Block Exemption for Liner Shipping Agreemments) Order, or BEO, for another five years until 31 December 2020.

Esben Poulsson, president of SSA, said any help that could be given to an industry as important to free trade and globalisation as container shipping is, must be welcomed.

“To me it is self-evident that the dismal state of the global container market and the extremely low box rates being paid, clearly prove that whatever help the industry can be given at this point will be most welcome,” Poulsson said.

“These historically low rates illustrates just how competitive the market is and highlight how any talk of this measure being ‘anti-competitive’, is just plain wrong,” he added.

The BEO exempts a category of liner shipping agreements from the prohibition against anti-competitive agreements in Singapore, allowing two or more carrier operators to jointly provide services in the areas of technical, operational or commercial arrangements and setting freight rates.

The BEO extension is in line with a recommendation made to the Singapore ministry by the Competition Commission of Singapore (CCS).

The CCS received five submissions in response to the public consultation. Four of the respondents were supportive of the proposed extension of the BEO, while one respondent was not in favour.

The commission assessed that liner shipping agreements, which fulfill the requirements set out in the BEO, continue to meet the net economic benefit criteria and qualify for exemption from the prohibition against anti-competitive agreements.

The CCS also took into consideration, amongst other factors, the size of the Singapore economy, that the city-state is not a major port of origin or destination, and that a very large proportion of Singapore’s container cargo throughput involves transhipment.