Following the European Commission's decision to expire the Consortium Block Exemption Regulation on 25 April 2024, Kuehne+Nagel sheds some light on how this could impact services to and from Europe.

What is the Consortia Block Exemption Regulation (CBER)

Owing to the fact that shipping involves a high degree of investment, liner companies form consortia to broaden their service offerings and achieve economies of scale.

A consortium could take the form of a vessel-sharing agreement, which is the basis of shipping alliances such as 2M, Ocean Alliance and THE Alliance.

In 2009, the European Commission introduced the CBER to support consortia in providing increased efficiency and broader networks while ensuring competition law compliance.

The CBER exempted consortia operating to or from Europe from certain competition laws, provided they met a set of criteria :

• The market share of the consortium should not exceed 30%.
• The consortium allows only for improved efficiency and service.
• Each carrier would determine its own commercial terms, including pricing. No rates were to be discussed between the partners.

According to the European Commission's recent assessment, market conditions have changed since the introduction of the CBER, and this legal framework no longer serves its purpose.

Thus, the CBER will expire on 25 April 2024.

What happens to consortia after the expiration

The expiration does not mean that consortia are prohibited in the EU.

Instead, from 25 April 2024, consortia, with a market share of less than 30%, would now be subject to EU anti-trust laws, which they were previously exempted from.

These carriers must self-assess their current and future agreements to ensure they comply with EU competition rules.

According to the study conducted by the commission, 30 of the 43 consortia operating in Europe have not enjoyed the exemption and are not affected by the expiration.

This leaves a small number of services that must be reviewed and/or adjusted to comply with competition law requirements.

What does this mean for Kuehne+Nagel customers

Kuhene+Nagel does not expect much change for our customers on the expiry of the CBER.

The key factors driving markets - supply and demand - will continue to do so. Additionally, competition remains high, and deterioration is not foreseen.

On the other hand, we expect carriers to reconfigure their networks over the next two years, especially after the 2M alliance between Maersk and MSC dissolves in January 2025.

More carriers could specialise or focus on specific trades instead of a broader network. At the same time, they may enter into vessel-sharing or slot charter agreements to expand their service offerings.

While network reconfiguration could improve some services, transit times for some port pairs may increase due to additional transhipments. This could specifically affect supply chain lead times negatively.

While these potential changes seem complex, Kuehne+Nagel customers will benefit from our access to a wide range of carrier services and sea logistics expertise to find the best possible solution for their cargo.