24 Apr 2012

Shipping should be subject to competition law - commission

7:50 pm on 24 April 2012

The Productivity Commission's final report to the Government on international freight has kept up the pressure on anti-competitive agreements between shipping lines.

In its final report on Tuesday, the commission says the agreements should be subject to normal competition law.

The commission raised the ire of the big international shipping lines when it released similar recommendations in a draft report earlier this year.

The industry says price-fixing between lines is not a feature of the New Zealand freight market.

Industry members worry that any crack-down could make the current cooperation between lines, which helps keep freight prices down, more difficult.

The head of the International Container Lines Committee, Julian Bevis from Maersk, says the removal of the current exemption for shipping lines could have consequences.

"The international container shipping market is not good at the moment. Lines are generally not making money and, therefore, they have to look at areas where it becomes more difficult to see a sustainable financial future."

The Productivity Commission says price-fixing deals should only be allowed if it can be proved that the public will benefit and other deals, such as agreements to share vessels, should be made public.

The head of the commission, Murray Sherwin, says big customers such as dairy cooperative Fonterra provide a lucrative trade to the shipping lines and cutbacks to services are unlikely.

The Labour Party on Tuesday criticised the report's refusal to acknowledge the need for a more strategic approach to reforming the port sector.

Transport spokesperson Phil Twyford says the report is idealogically blinkered in its backing of a continuation of all-out competition between regional ports. He says a Government strategy for the port sector is urgently needed so investment in road and rail links can be prioritised.

Mr Twyford says investment is most needed in ports in the upper North Island where future freight growth is likely to be greatest.

Finance Minister Bill English says the Government will consider the report before deciding on recommendations to adopt.