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Manufacturers demand action over ‘cartel-like’ shipping costs

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Maersk, the world’s biggest shipping line, directed its vessels away from Felixstowe last week
Maersk, the world’s biggest shipping line, directed its vessels away from Felixstowe last week

The shipping industry must be investigated over allegations of “cartel-like” behaviour and soaring fees that are causing shortages and fuelling inflation, manufacturers have demanded.

MakeUK, the trade body which represents Britain’s industrial base, is calling on the Competition and Markets Authority (CMA) to examine whether the rocketing cost of transporting goods can be justified.

It is joining an earlier demand from the British Chambers of Commerce (BCC) for an investigation as the two groups’ 100,000 member companies buckle under surging prices for seaborne transport.

The organisations are preparing an open letter to the CMA appealing for “urgent action” to investigate whether charges are being coordinated or inflated by shipping companies, with many of their smaller members especially strained by higher costs.

Freight prices have jumped over the past year as disruption at ports increases already-fierce competition for space on ships.

The average price being paid for a 40-foot container from East Asia to Europe is $15,000 (£10,900) according to Freightos, a website which tracks the shipping market – about 10 times higher than at the onset of the pandemic.

There have been allegations that big shipping companies are engaged in cartel-like behaviour, with claims they have taken advantage of the race to secure shipping slots to drive prices higher.

A report from shipping consultancy Drewry forecast that container shipping companies will between them make “surreal” profits of $150bn this year – as much as the previous 20 years combined.

Companies are feeling the squeeze, with product shortages and warnings that shoppers should get ahead on purchases for the holiday season.

A draft of the letter to the regulator from MakeUK and the BCC, seen by The Sunday Telegraph, says: “Recent announcements on substantial increase in profits for the major shipping companies without extra investment in capacity or offers of alternative solutions would suggest there are significant competition issues at play.”

The trade bodies said an “investigation of anticompetitive practices or cartel-like practices affecting UK companies is now becoming more urgent”. They called on the CMA and Government to “work at pace to discuss the evidence on the functioning of the shipping market”.

A spokesman for the CMA said: “We are aware of increases in the cost of international shipping and have received reports of market issues and allegations of collusion and price fixing – all of which we are taking seriously.

“As such, we welcome additional information. We are also involved in discussions with the UK Government, our international counterparts and industry on this issue.”

The watchdog has the power to impose a fine of up to 10pc of global revenues if it finds that a company has been involved in anticompetitive behaviour.

The shipping industry has disputed the claims that it is profiteering.

A spokesman for the UK Chamber of Shipping said: “Since the pandemic started there has been unprecedented demand for goods around the world.

“As demand for goods around the world has increased, so inevitably has the cost of moving these items. However, many container lines have brought on extra capacity and moved more ships on to busier trade routes.”

The body said it is working with the Government’s freight council, and expects to be included in a group assembled by the newly appointed supply chain tsar Sir Dave Lewis as he seeks to tackle shortages.

Problems may last well into next year. However, analysts at Jefferies say pressure on supply chains is likely to ease after Christmas, followed by a “significant improvement” in the second half of 2022.

Maersk, the world’s biggest shipping line, directed its vessels away from Felixstowe last week amid backlogs at Britain’s biggest cargo port.

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