Regulator's lens on shipping costs

Shippers cartelising in Indian waters may not have a smooth voyage in the days to come. Parliament has finally enacted laws that empower the Competition Commission of India (CCI) to keep a check on and punish those indulging in trade malpractices, including those in the shipping sector.

This means that shipping lines forming cartels to fix freight rates and other operational charges might soon have penalties of up to several million dollars slapped on them or dominating companies may even be forced to break up.

The shipping industry has been on the CCI radar for long primarily because of the India-Pakistan-Bangladesh-Ceylon Conference (IPBCC) that controls about 75 per cent of the traffic between India and Europe.

The IPBCC fixes freight rates and other charges like terminal handling charge (THC), bunker adjustment factor (BAF), and currency adjustment factor (CAF), which is followed by its members, and also becomes a standard for non-members.

The CCI which will eventually replace the MRTP Act will also endorse mergers, pricing, acquisitions and competition by players in the shipping circuit. Surely, good news for exporters if it is found that the shipping costs are not reasonable.