List of Tables & Graphs

LIST OF TABLES & GRAPHS

1. Table 1: EU container trades...... 3 2. Table 2: World container trades...... 4 3. Table 3: Top 25 container carriers – Chartered capacity ...... 5 4. Table 4: Top 26-50 carriers...... 6 5. Table 5: Competition by conference (Source: ELAA web-site)...... 7 6. Table 6: List of conferences operating to and from Europe...... 14 7. Table 7: Competitive situation on the Europe – Far East trade ...... 16 8. Graph 1: North Europe – Far East trade – Capacity shares on conference level...... 16 9. Graph 2: North Europe – Far East trade – Concentration rates ...... 17 10. Graph 3: Europe – Far East trade – Capacity shares on consortia level ...... 18 11. Table 8: Market concentration on the Europe – Asia trade ...... 19 12. Table 9: Competitive situation on the Mediterranean – Far East trade...... 21 13. Graph 4: Mediterranean – Far East trade – Capacity shares on conference level...... 22 14. Graph 5: Mediterranean – Far East trade – Concentration rates...... 23 15. Graph 3: Mediterranean – Far East trade – Capacity shares on consortia level ...... 24 16. Table 10: Competitive situation on the Transatlantic trade ...... 25 17. Graph 7: Transatlantic trade – Capacity shares on conference level ...... 26 18. Graph 8: Transatlantic trade – Concentration rates...... 27 19. Graph 9: Transatlantic trade – Capacity shares on consortia level ...... 28 20. Table 11: Market concentration on the Transatlantic trade ...... 29 21. Table 12: Competitive situation on the Mediterranean-North America Trade...... 31 22. Graph 10: Mediterranean – North America trade – Capacity shares on conference level...... 32 23. Graph 11: Mediterranean – North America trade – Concentration rates ...... 33 24. Graph 12: Mediterranean – North America trade – Capacity shares on consortia level ...... 33 25. Table 13: Competitive situation on the Europe – West Africa trade ...... 35 26. Graph 13: Europe – West Africa trade – Capacity shares on conference level ...... 36 27. Graph 14: Europe – West Africa trade – Concentration rates ...... 37

1 28. Graph 15: Europe – West Africa trade – Capacity shares on consortia level...... 38 29. Table 14: Market concentration on the Europe – West Africa trade ...... 39 30. Table 15: Ratio of liner freight rates to prices of selected (low value) commodities 40 31. Table 16: Competitive situation on the Europe – South African trade...... 41 32. Graph 16: Europe – South African trade – Concentration rates ...... 41 33. Graph 17: Europe – South African trade – Capacity shares on conference level...... 42 34. Graph 18: Europe – South African trade – Capacity shares on consortia level...... 42 35. Table 17: Competitive situation on the Europe – East Coast South America trade .. 44 36. Graph 19: Europe – East Coast South America trade – Capacity shares on conference level ...... 44 37. Graph 20: Europe – East Coast South America trade – Concentration rates...... 45 38. Graph 21: Europe – East Coast South America trade – Capacity shares on consortia level ...... 46 39. Table 18: Competitive situation on the Europe – West Coast South America trade . 47 40. Graph 22: Europe – West Coast South America trade – Capacity shares on conference level ...... 47 41. Graph 23: Europe – West Coast South America trade – Concentration rates ...... 48 42. Graph 24: Europe – West Coast South America trade – Capacity shares on consortia level ...... 49 43. Table 19: Competitive situation on the Europe – Australia trade...... 50 44. Graph 25: Europe – Australia trade – Capacity shares on conference level...... 50 45. Graph 26: Europe – Australia trade – Concentration rates ...... 51 46. Graph 27: Europe – Australia trade – Capacity shares on consortia level...... 52 47. Table 20: Market concentration on the Europe – Ocenia trade ...... 53 48. Table 21: Competitive situation on a number of smaller trades ...... 55 50. Table 22: EU carriers’ profitablility...... 58 51. Table 23: Top 10 carriers’ North-South Trades...... 58 52. Table 24: Top charter lines ...... 59

Table 1: EU container trades

Estimated 2003 EU container trade by route ('000 teu) East - West Eastbound Westbound Total absolute % absolute % absolute % % of EU total Transatlantic 2.051 27,12% 3.201 30,15% 5.252 28,89% 17,06% Europe - Far East 4.063 53,71% 6.967 65,61% 11.030 60,66% 35,82% Europe - Mid East 1.450 19,17% 450 4,24% 1.900 10,45% 6,17% Total East - West 7.564 100,00% 10.618 100,00% 18.182 100,00% 59,04%

North-South Southbound Northbound Total absolute % absolute % absolute % % of EU total Europe - Latin America 569 19,74% 1.204 39,76% 1.773 29,99% 5,76% Europe - South Asia 600 20,81% 1.000 33,03% 1.600 27,07% 5,20% Europe - Africa 1.350 46,83% 700 23,12% 2.050 34,68% 6,66% Europe - Australasia 364 12,63% 124 4,10% 488 8,26% 1,58% Total North - South 2.883 100,00% 3.028 100,00% 5.911 100,00% 19,20%

Intra - Regional Southbound Northbound Total absolute % % of EU total Europe 6.700 100,00% 21,76% Total Intra - Regional 6.700 100,00% 21,76% EU Total 30.794 Source: Drewery Shipping Consultants Ltd. The Drewery Container Market Review - "004/05

Table 2: World container trades

Estimated 2003 world container trade by route ('000 teu) East - West Eastbound Westbound Total absolute % absolute % absolute % % of world total Transpacific 9.632 54,05% 4.375 24,95% 14.007 39,62% 15,41% Transatlantic 2.051 11,51% 3.201 18,26% 5.252 14,86% 5,78% Europe - Far East 4.063 22,80% 6.967 39,74% 11.030 31,20% 12,13% Europe - Mid East 1.450 8,14% 450 2,57% 1.900 5,37% 2,09% N.America - Mid East 256 1,44% 139 0,79% 395 1,12% 0,43% Far East - Mid East 370 2,08% 2.400 13,69% 2.770 7,84% 3,05% Total East - West 17.822 100,00% 17.532 100,00% 35.354 100,00% 38,89% North-South Southbound Northbound Total absolute % absolute % absolute % % of world total Europe - Latin America 569 6,31% 1.204 13,39% 1.773 9,01% 1,95% Europe - South Asia 600 6,65% 1.000 11,12% 1.600 8,13% 1,76% Europe - Africa 1.350 14,97% 700 7,79% 2.050 10,42% 2,25% Europe - Australasia 364 4,04% 124 1,38% 488 2,48% 0,54% N. America - Latin America 1.684 18,68% 1.951 21,70% 3.635 18,47% 4,00% N. America - South Asia 194 2,15% 439 4,88% 633 3,22% 0,70% N. America - Africa 176 1,95% 138 1,53% 313 1,59% 0,34% N. America - Australasia 190 2,11% 160 1,78% 350 1,78% 0,38% Far East - Latin America 750 8,32% 1.000 11,12% 1.750 8,89% 1,92% Far East - South Asia 500 5,55% 250 2,78% 750 3,81% 0,82% Far East - Africa 850 9,43% 725 8,06% 1.575 8,00% 1,73% Far East - Australasia 1.750 19,41% 850 9,45% 2.600 13,21% 2,86% Mid East - South Asia 40 0,44% 450 5,01% 490 2,49% 0,54% Other (North South) 775 3,94% 0,85% Other (South - South) 895 4,55% 0,98% Total North - South 9.017 100,00% 8.991 100,00% 19.677 100,00% 21,64%

Intra - Regional Southbound Northbound Total absolute % % of world total Asia 25.970 72,38% 28,57% Europe 6.700 18,67% 7,37% North America 1.200 3,34% 1,32% Mid East 180 0,50% 0,20% Latin America 750 2,09% 0,82% South Asia 325 0,91% 0,36% Africa 355 0,99% 0,39% Australasia 400 1,11% 0,44% Total Intra - Regional 35.880 100,00% 39,47% World Total 90.912 Source: Drewery Shipping Consultants Ltd. The Drewery Container Market Review - "004/05

Table 3: Top 25 container carriers – Chartered capacity

The top 25 league - registered capacity owned by liner operators Operated Reliance on ELAA World Total owned Chartered No. Of Average Owner Nationality Capacity Chartered Member* Share Capacity (Teu) Capacity (Teu) Vessels Size (Teu) (Teu) Tonnage Maersk Seeland/AP Moller/Safemarine/Norfolkline/OACL/Portlink DK YES 861.857 13,2% 542.406 319.451 37,1% 142 3.820 MSC CH YES 522.981 8,0% 234.475 288.506 55,2% 83 2.825 Evergreen/Hatsu/Lloyd Trestino Taiwan YES 418.707 6,4% 351.734 66.973 16,0% 115 3.059 P&O Nedlloyd Container Line (Farrell Med Express, Mercosul Line) UK-NL YES 392.424 6,0% 164.227 228.197 58,2% 43 3.819 Hanjin Shipping Co. (Senator Lines) Korea YES 277.581 4,3% 90.803 186.778 67,3% 26 3.492 NOL/APL Singapore YES 266.670 4,1% 160.058 106.612 40,0% 48 3.335 CMA-CGM (ANL, Andrew Weir, Carribbean General Maritime, FAS, Mac Andrews) FYES261.031 4,0% 81.917 179.114 68,6% 27 3.034 Cosco China YES 251.527 3,9% 244.805 6.722 2,7% 132 1.855 NYK Line Japan YES 217.351 3,3% 150.706 66.645 30,7% 50 3.014 MOL (Mitsui OSK Lines) Japan YES 202.729 3,1% 126.109 76.620 37,8% 37 3.408 CP Ships Group (ANZDL, CanMar, CAST, Contship, Italia di Navigazione, Lykes Line, TMM Lines) UK, Canada YES 190.832 2,9% 105.627 85.205 44,6% 38 2.780 K Line Japan YES 186.058 2,8% 136.656 49.402 26,6% 40 3.416 CSCL (China Shipping Container Lines) China YES 184.804 2,8% 49.734 135.070 73,1% 24 2.072 OOCL Hong-Kong YES 183.516 2,8% 116.537 66.979 36,5% 30 3.885 Hapag-Lloyd D YES 161.582 2,5% 118.552 43.030 26,6% 26 4.560 Yangming Marine Transport Corp Taiwan YES 149.503 2,3% 101.315 48.188 32,2% 32 3.166 Zim Israel Navigation (Gold Star Line, Laurel Navigation) Israel YES 141.573 2,2% 58.227 83.296 58,8% 19 3.067 Hyundai Mercant Marine Korea YES 130.054 2,0% 71.803 58.251 44,8% 19 3.779 Hamburg-Sud/Alanca D YES 116.105 1,8% 42.347 73.758 63,5% 16 2.647 Wan Hai Lines Taiwan No 87.578 1,3% 57.221 30.357 34,7% 40 1.431 PIL (Pacific International Lines; Advance Container Line) Singapore No 87.252 1,3% 61.074 26.178 30,0% 54 1.131 UASC Kuwait YES 64.464 1,0% 60.996 3.468 5,4% 22 2.773 SCAC Delmas-Vieljeux (OTAL, Setramar, Sudcargos) FYES60.608 0,9% 25.316 35.292 58,2% 14 1.808 MISC Malaysia YES 40.867 0,6% 37.395 3.472 8,5% 26 1.438 RCL (Regional Container Lines) Thailand No 33.023 0,5% 27.951 5.072 15,4% 30 932 Horizon Lines LLC U.S. No 29.769 0,5% 29.769 0 0,0% 16 1.861 Other 1.008.118 15,4% 390.258 617.910 61,3% 503 776 Atlantic Container Line AB (Grimaldi Sweden, Naviagzione) Italy YES Grand Total 6.528.564 100% 3.638.018 2.890.546 44.3% 1.652 2.202 HHI Top 4 carriers 315,2 Source: The Drewery Anual Container Market Review and Forecast, January 2004 and Dynamar web-site. * February 2005

Table 4: Top 26-50 carriers

The top 26-50 league - registered capacity owned by liner operators Operated ordered No. Of Vessels Carriers and subsidiaries Capacity capacity Vessels on order (Thousand TEU) (TEU) RCL (Siam Paetra) 46,6 43 11,8 5 Grimaldi Naples (Atlantic Container Line) 42,4 34 0,0 0 China Navigation (Bank Line, Chief Container Service, Greater Bali Hai, Indotrans, New Guinea Pacific Line, Tasman Orient Line) 35,6 38 0,0 0 MISC 35,0 17 15,8 2 Costa Container Line (Gilnavi) 34,0 30 21,1 10 Sinotrans 30,6 36 15,8 9 Sea Consortium (X Press Container Line, West Asia Kontena Line) 29,5 40 0,0 0 CCNI 29,2 16 0,0 0 Horizon Lines 27,2 16 0,0 0 KMTC 25,7 24 0,0 0 Finnlines (Team Lines) 23,3 48 0,5 1 FECSo 23,3 29 9,9 8 Samudera 23,2 27 0,0 0 Matson 22,1 14 0,0 0 Messina 21,8 17 0,0 0 SYMS 21,7 30 12,9 13 Schöller Group (Austral Asia Line, Bengal Tiger Line, Project Asia Service) 20,7 18 0,0 0 UniFeeder 20,1 34 2,4 3 Heung-A 19,5 27 0,0 0 Maruba (CLAN) 18,8 12 0,0 0 Seaboard Marine 18,6 30 0,0 0 SITC 16,5 23 6,8 8 Crowly Liner 16,0 24 0,0 0 Cheng Lie 15,5 13 2,7 2 Dongnama 14,8 14 0,0 0 Total top 26-50 632 654 100 61 World total 8.242 5.129 3.996 1.129 Share Top 26-50 8% 13% 2% 5%

Source: Dyna Liners 07/2005 as of early February 2005.

Table 5: Competition by conference (Source: ELAA web-site), text in italics indicates non-conference lines

Trades Consortium Operators Slotcharters Region Europe 1. North Europe- Asia Grand Alliance HL, MISC ,NYK, OOCL, none (FEFC-EMA/Eastbound PONL Management Agreement) The New World APL, Hyundai, MOL None Alliance “Unnamed Alliance” COSCO, K-Line, CMA-CGM, Sinotrans, Yangming, Hanjin UASC, Senator Maersk Sealand none Evergreen/LT Evergreen/LT CMA-CGM CMA- CMA- Contship, CSCL, CGM/Norasia/ANL CGM/Norasia/ANL Evergreen Others: MSC, CSCL n/s 2. Europe-Middle East Grand Alliance HL, (MISC) ,NYK, none (Euroasia Service(EB); OOCL, PONL Europe/ Middle East rate EPIC AWS, CMA-CGM, Delmas, PNSC, POL, LT, Agreement) Contship, PONL HL Safmarine none Maersk Sealand none United Alliance Senator, Hanjin, UASC AWS, HL CMA-CGM/Norasia CMA-CGM/Norasia Cscl, Contship, Evergreen IRISL IRISL Rickmers Others MSC, PNSC, Hyundai, n/a Ceylon Sh, Corp., Messina, APL 3. Europe–Indian Ocean EPIC AWS, CMA-CGM, Delmas, PNSC, POL, LT, (Euroasia Service; Contship, PONL HL Indian, Pakistan, Safmarine none Bangladesh and Ceylon Grand Alliance HL, (MISC) ,NYK, none Conference) OOCL, PONL The New World APL, Hyundai, MOL None Alliance Maersk Sealand none “Unnamed Alliance” Senator, Hanjin, (UASC) AWS, K-Line, Yangming Evergreen Evergreen/LT none Indian Subcontinent SCI, Yangming, ZIM, CSC, COSCO Evergreen Europe Service Evergreen, K-Line, MISC Senator, Hanjin (IES/IEX) CMA-CGM/Norasia CMA-CGM/Norasia none Others MSC, IRISL, PNSC, Bangladesh, SC, Himalya Exp., Rickmers, Messina 4. Europe- Red Sea Grand Alliance HL, MISC ,NYK, OOCL, none (JSG-Jeddah Service PONL Group) Maersk Sealand none “Unnamed Alliance” Senator, Hanjin, UASC HL The New World APL, Hyundai, MOL None Alliance CMA- CMA-CGM, ANL, none CGM/ANL/Norasia Norasia Others MSC, IRISL

7 Trades Consortium Operators Slotcharters 5. Europe – Westabout/Eastabout PONL, Contship, HSDG, CHL, Hyundai, Australia/New Zealand HL, CMA-CGM Wilhelmsen (TEANC – The Europe to MSC MSC POL, Safbank, Safmarine Australia and New Zealand Conference Others Evergreen/LT (ex Med.), plus all relay carriers via SG, particularly MSK 6. Mediterranean – Asia Grand Alliance HL, MISC ,NYK, OOCL, none (FEFC-MRA- PONL Mediterranean Rate The New World APL, Hyundai, MOL None Agreement) Alliance “Unnamed Alliance” COSCO, K-Line, ZIM, UASC, Norasia, Yangming, Hanijn DL, Senator Maersk Sealand Safmarine Evergreen Evergreen/LT ZIM CMA- CMA-CGM, Norasia, CSCL, Contship, Hanjin, CGM/Norasia/ANL ANL Lykes, Senator, Evergreen, ZIM ZIM/Norasia ZIM/Norasia CSCL, COSCO, Evergreen, K-Line, CSCL CSCL CMA-CGM, ZIM Others MSC 7. North Europe-USA Grand Alliance/ HL, NYK, OOCL, PONL ACL, COSCO, K-Line, (TACA II- revised Americana Ships Yangming, Hanjin TransAtlantic TMM, Lykes APL, Evergreen, MOL, Conference Agreement) Deppe, CMA-CGM The New World APL, Hyundai, MOL Maersk Sealand, CMA- Alliance CGM “Unnamed Alliance” COSCO, K-Line, CSAV, Hanjin, ZIM, Yangming, Hanijn Norasia, UASC, Evergreen Maersk Sealand New World Alliance Evergreen Evergreen none ACL ACL HL, MSC Contship/CMA- Contship, CMA-CGM, Hyundai CGM/Marfret Marfret Others MSC, Independent L., Hyundai, ACS 8.North Europe-Canada SLCS Canmar, OOCL Cast, HL (Cansec- Canadian CAST Cast Canmar, OOCL Atlantic Freight CANEX Maersk, PONL, MSC NYK, Samskip Secretariat-Canada E.C.) MSC MSC ACL ACL(Hfx only) ACL HL, MSC Grand Alliance (Hfx HL, NYK, OOCL, PONL ACL only) Others All major US carriers via X borders, APL 9. North Europe-Mexico Grand Alliance/ HL, OOCL, PONL none (Atlantic) (Gumex Americana Ships Service (WB) –WITASS (GUMEX) TMM, Lykes CMA-CGM, Deppe -West India TransAtlantic Steamship Stinnes Stinnes none (Association of “Witass” MSC MSC Hyundai lines) – Mexican Section Others (mainly in Contship, Coral, CSAV, none transhipment) Cuflet, Maersk Sealand, HDSG, Melbridge, Maersk Sealand and United Alliance (Manzanillo), Hanseatica

8 Line GmbH (project cargo service) Trades Consortium Operators Slotcharters 10. Mediterranean–USA Grand Alliance HL, NYK, (OOCL), none (USSEC – United States PONL South Europe Americana Ships TMM, Lykes HL, Italia, ZIM, CSCL Conference) COSCO, K-Line, YML COSCO, K-Line, ZIM, Hanjin, Senator Yangming Maersk Sealand CMA-CGM, APL ZIM ZIM COSCO, Italia, Norasio PONL-Farrell/HL PONL-Farrell/HL None PONL-Farrell/HL (MAS PONL-Farrell/HL, ZIM None Service) CSAV/ZIM (via Suez) CSAV, ZIM none Others MSC, Nordana, Turkon Line 11. North Europe – South EUROSAL III HL, CSAV, HSDG, none America West Coast PONL, CMA-CGM (SAWC) (ESPM – Condor Service CCNI, K-Line PONL European/ South Pacific & Magellan Others (direct) Ecuadorian Line, Dole Conference/WITASS – Express, several RO-RO Panama/Jamica = carriers WITASS, See NCS) Others (via Maersk Sealand, MSC, USA/Kgst/Freep) Evergreen 12. Europe – Caribbean New Carribbean Service HL, CMA-CGM, HSDG, none Islands, Venezuela, PONL, CSAV Colombia(Atl), Central Others (direct) Cool Carriers, Dole America, E.C Express, EWIL, CCNI, Gesest, Horn Line, Great White Fleet, ECL Others (via USA) MSC, Marfret, APL Others (via Panama( Evergreen, Maersk Sealand 13. North Europe – South HSDG/Maersk HSDG, Maersk Sealand, CMA-CGM, HL America East COSAT Sealand/Alicana Alicana (SAEC) (EECSAC – HSDG/Alicana/CMA- HSDG, Alicana HL Europe East Coast Soth CGM America Conference) Maersk Sealand Safmarine MSC MSC (ex) VSA 1&2 PONL none (new) VSA CSAV, Montemar, NYK, Senator, Hanijn, Lykes, Contship Braztrans, Libra Grimaldi Grimaldi none Region East 1. Asia – North Europé Grand Alliance HL, MISC, OOCL, none (FECF – Asia Westbound PONL Rate Agreement) The New World APL, Hyundai, MOL None Alliance “Unnamed Alliance” COSCO, K-Line, CMA-CGM, Sinotrans, Yangming, Hanjin UASC, Senator Maersk Sealand none Evergreen/LT Evergreen, LT CMA-CGM CMA- CMA-CGM, Norasia, Contship, CSCL, CGM/Norasia/ANL ANL Evergreen Others: MSC, CSCL none

Trades Consortium Operators Slotcharters 2. Asia – North Europe Grand Alliance HL, MISC, OOCL, none (FEFC – JEFC PONL Japan/Europe Freight The New World APL, Hyundai, MOL None Conference Alliance “Unnamed Alliance” COSCO, K-Line, ZIM, CMA-CGM, Yangming, Hanjin Senator Maersk Sealand none Evergreen Evergreen LT, CMA-CGM CMA- CMA-CGM, Norasia, Contship, CSCL, CGM/Norasia/ANL ANL Evergreen Others: MSC, CSCL none 3. Japan-Mediterranean Grand Alliance HL, MISC, NYK, OOCL, none (FEFC-JMFC- PONL Japan/Med. Freight The New World APL, Hyundai, MOL None Conference) Alliance “Unnamed Alliance” COSCO, K-Line, ZIM, CMA-CGM, Yangming, Hanjin UASC, Norasia, Evergreen Maersk Sealand none Evergreen Evergreen, LT none CMA- CMA-CGM, Norasia, CSCL, Contship, Lykes, CGM/Norasia/ANL ANL Senator, UASC, ZIM ZIM/Norasia ZIM, Norasia CSCL, CSAV, COSCO, Italia, K-line Others: MSC, ECS/ADX 4. Japan – Jeddah Grand Alliance HL, MISC, NYK, OOCL, none (FEFC-JGARS- PONL Japan/Gulf of Aden & The New World APL, MOL, Hyundai Yangming Red Sea Ports Alliance Conference) PIL PIL none Maersk Sealand none CMA-CGM, EISC, ENC, Senator, UASC 5. Asia-Mediterranean Grand Alliance HL, MISC, NYK, OOCL, none (FEFC – MRA PONL Mediterranean Rate The New World APL, MOL, Hyundai, none Agreement) Alliance Yangming “Unnamed Alliance” COSCO, K-Line, ZIM, UASC, Norasia, Yangming, Hanjin DL, Senator Maersk Sealand Safmarine Evergreen Evergreen, LT ZIM CMA- CMA-CGM, Norasia, CSCL, Contship, Lykes, CGM/Norasia/ANL ANL Senator, ZIM Senator, Zim, Evergreen CSCL CSCL CMA-CGM, ZIM ZIM/Norasia ZIM, Norasia CSCL, CSAV, COSCO, Evergreen, K-line Others MSC, ECS/ADX none 6. Australia/New Zealand Westabout/Eastabout PONL, Contship, HSDG, CHL, Hyundai, – Europe (ANZELA- HL, CMA-CGM Wilhelmsen Australia/New Zealand to MSC MSC POL, Safbank, Safmarine Europe Liner Association) Others Evergreen/LT (ex Med.), plus all relay carriers via SG, particularly MSK

Trades Consortium Operators Slotcharters 7. Middle East-Europe Grand Alliance HL, (MISC) ,NYK, none (Euroasia Service, now OOCL, PONL goverened by EMERA) EPIC AWS, CMA-CGM, Delmas, PNSC, POL, LT, Contship, PONL HL Safmarine none Maersk Sealand none United Alliance Senator, Hanjin, UASC AWS, HL CMA-CGM/Norasia CMA-CGM/Norasia Cscl, Contship, Evergreen IRISL IRISL Rickmers Others MSC, PNSC, Hyundai, n/a Ceylon Sh, Corp., Messina, APL 8. Indian Ocean-Europe EPIC AWS, CMA-CGM, Delmas, PNSC, POL, LT, (Euroasia Service(WB), Contship, PONL HL IPBC-Indian, Pakistan, Safmarine none Bangladesh and Ceylon Grand Alliance HL, (MISC) ,NYK, none Conference) OOCL, PONL The New World APL, Hyundai, MOL None Alliance Maersk Sealand none “Unnamed Alliance” Senator, Hanjin, (UASC) AWS, K-Line, Yangming Evergreen Evergreen/LT none Indian Subcontinent SCI, Yangming, ZIM, CSC, COSCO Evergreen Europe Service Evergreen, K-Line, MISC Senator, Hanjin (IES/IEX) CMA-CGM/Norasia CMA-CGM/Norasia none Others MSC, IRISL, PNSC, Bangladesh, SC, Himalya Exp., Rickmers, Messina 9. Asia – USA (TSA- Grand Alliance HL, (MISC) ,NYK, none Transpacific Stabilization OOCL, PONL Agreement) The New World APL, Hyundai, MOL Zim, Evergreen Alliance “Unnamed Alliance” COSCO, K-Line, Wan Hai, Senator, Yangming, Hanjin CSAV, Sinotrams, GA Maersk Sealand Safmarine Evergreen/LT Evergreen, LT TNWA, CMA-CGM Zim Zim CSCL, Italia, Norasia CMA- CMA-CGM, Norasia, CSCL, Wan Hai, Zim, CGM/Norasia/ANL ANL Senator, Lykes, Hanijn CSCL CSL Zim, Norasia CMA- CMA- HL,LT CGM/PONL/CSCL CGM/PONL/CSCL CSAV, ZIM CSAV,ZIM CSCL, Norasia, COSCO, K-Line Others MSC, Fesco, CSCL, TPL, NPSC, ASC/Lykes/TMM, CCNII, ECS, GWS

Trades Consortium Operators Slotcharters Region West 1. USA-North Europe Grand Alliance/ HL, NYK, OOCL, PONL ACL, COSCO, K-Line, (TACA II- revised Americana Ships Yangming, Hanjin TransAtlantic TMM, Lykes APL, Evergreen, MOL, Conference Agreement Deppe, CMA-CGM The New World Alliance APL, Hyundai, MOL Maersk Sealand, CMA- CGM “Unnamed Alliance” COSCO, K-Line, CSAV, Hanjin, ZIM, Yangming, Hanijn Norasia, UASC, Evergreen Maersk Sealand New World Alliance Evergreen Evergreen none ACL ACL HL, MSC Contship/CMA- Contship, CMA-CGM, Hyundai CGM/Marfret Marfret Others MSC, Independent L., Hyundai, ACS 2.Canada-North Europe SLCS Canmar, OOCL Cast, HL (Cansec- Canadian CAST Cast Canmar, OOCL Atlantic Freight CANEX Maersk, PONL, MSC NYK, Samskip Secretariat-Canada E.C.) MSC MSC ACL ACL(Hfx only) ACL HL, MSC Grand Alliance (Hfx HL, NYK, OOCL, PONL ACL only) Others All major US carriers via X borders, APL 3. USA-Mediterranean Grand Alliance HL, NYK, (OOCL), none (USSEC – United States PONL South Europe Americana Ships TMM, Lykes HL, Italia, ZIM, CSCL Conference) COSCO, K-Line, YML COSCO, K-Line, ZIM, Hanjin, Senator Yangming Maersk Sealand CMA-CGM, APL ZIM ZIM COSCO, Italia, Norasio PONL-Farrell/HL PONL-Farrell/HL None PONL-Farrell/HL (MAS PONL-Farrell/HL, ZIM NYK, Italia Service) CSAV/ZIM (via Suez) CSAV, ZIM none Others MSC, Nordana, Turkish Cargo, Turkon Line 4. Mexico-North Europe Grand Alliance/ HL, OOCL, PONL none (Gumex Service (EB) – Americana Ships WITASS -West India (GUMEX) TMM, Lykes CMA-CGM, Deppe TransAtlantic Steamship Stinnes Stinnes none (Association of “Witass” lines) – Mexican Section) MSC MSC Hyundai Others (mainly in Contship, Coral, CSAV, transhipment) Cuflet, Maersk Sealand, HDSG, Melbridge, 5. Caribbean Islands, New Carribbean Service HL, CMA-CGM, HSDG, none Venezuela,Colombia(Atl), PONL, CSAV Central America, E.C. – Others (direct) Cool Carriers, Dole Europe (WITASS –West Express, EWIL, CCNI, Indian TransAtlantic Gesest, Horn Line, Great Steamship- Association of White Fleet, ECL “WITASS lines” Others (via USA) MSC, Marfret, APL

12 Others (via Panama( Evergreen, Maersk Sealand 6. South America West EUROSAL III HL, CSAV, HSDG, none Coast (SAWC) – North PONL, CMA-CGM Europe (ESPM – Condor Service CCNI, K-Line PONL European/ South Pacific Others (direct) Ecuadorian Line, Dole & Magellan Express Conference/WITASS – Others (via Freeport) Leif Hoegh, MSC Panama/Jamica = Others (via Panama( Evergreen, Maersk WITASS, See NCS) Sealand 7. South America East HSDG/Maersk HSDG, Maersk Sealand, CMA-CGM, HL COSAT (SAEC) – North Sealand/Alicana Alicana Europe (EECSAC – HSDG/Alicana/CMA- HSDG, Alicana HL Europe East Coast Soth CGM America Conference) Maersk Sealand Safmarine MSC MSC (ex) VSA 1&2 PONL none (new) VSA CSAV, Montemar, NYK, Senator, Hanijn, Lykes, Contship Braztrans, Libra Grimaldi Grimaldi none 9. USA - Asia (WTSA- Grand Alliance HL, (MISC) ,NYK, none Westbound Transpacific OOCL, PONL Stabilization Agreement) The New World Alliance APL, Hyundai, MOL Zim, Evergreen “Unnamed Alliance” COSCO, K-Line, Wan Hai, Senator, Yangming, Hanjin CSAV, Sinotrams, GA Maersk Sealand Safmarine Evergreen/LT Evergreen, LT TNWA, CMA-CGM Zim Zim CSCL, Italia, Norasia CMA-CGM/Norasia CMA-CGM, Norasia CSCL, Wan Hai, Zim, Senator, Lykes, Hanijn CSCL CSL Zim, Norasia CMA- CMA- HL,LT CGM/PONL/CSCL CGM/PONL/CSCL CSAV, ZIM CSAV,ZIM CSCL, Norasia, COSCO, K-Line Others MSC, Fesco, CSCL, TPL, NPSC, ASC/Lykes/TMM, CCNII, ECS, GWS

Table 6: List of conferences operating to and from Europe

List of Conferences Operating to and from Europe (by size)

Large TACA FEFC

Medium Europe/East Coast South America (EECSAC) Europe/Middle East Rate Agreement (EMERA) India Pakistan Bangladesh Ceylon Conference (IPBCC) Europe Mediterranean Trade Agreement (EMTA) Europe West Africa Trade Agreement (EWATA) Europe/Canada Conference Europe/Australia-New Zealand Conference Europe/South Africa Conference (ESAC)

Small US/ South Europe Conference (USSEC) Jeddah Service Group (JSG) Mediterranean/Arabian Gulf Conference (MARCO) WITASS Mediterranean/Canada Conference (MEDCAN) Canada UK Freight Conference Europe/East Africa Conference Europe/South Pacific & Magellan Conference Europe/Canary Islands Conference

Very small French West Indies Conference Caribbean Sea Conference (CARSEACON) Aqaba Rate Agreement (ARA) Congo Europe West Africa Lines North Europe Djibouti Conference Salerno/UK, Ireland, Continent and Scandinavia Conference UK/North Europe-Portugal Conference Europe Sudan Container Lines Agreement Euroceania Freight Conference

Source: ELAA web-site

1.1.1. Market structure and competitive situation on the Europe – Far East trade

1. The Europe – Far East trade is the most important European route and after the Transpacific and intra-Asian trade the third largest in global terms (see Table 1). The trade is further subdivided in the North Europe and the Mediterranean to Far East trade.1

Market actors

2. There are two conferences active on the Europe – Far East trade - the Far Eastern Freight Conference (FEFC) which is the second largest conference and the Japan Europe Freight Conference (JEFC). The most important members to the FEFC conference are Maersk, P&O Nedlloyd, APL and CMA CGM (see Table 7). Five significant consortia are offering services on the route: Grand Alliance, New World Alliance, COSCO/K-Line/Yangming/Hanjin, Evergreen/LT and CMA CGM/Norasia/ANL.

Capacity concentration

3. The FEFC has 15 member carriers. There are another five carriers that are not members to FEFC but operate within a consortium with at least one conference member.2 Hence, the FEFC has also an influence on these non-FEFC carriers via its own members. Moreover, the non-FEFC consortia members may themselves benefit from information that is shared within the conference. The aggregated capacity of all twenty carriers accounts for 84%, which the FEFC may be able to control. Other operators that are not linked to FEFC are: the individual carrier MSC and the consortium Evergreen/Lloyd Triestino that both run 6.5% of the capacity on the trade and the consortium PIL/Wan Hai (capacity share 1.8%). These top4 entities have a capacity share of 98.7%. The HHI amounts to 7132 which displays the (North) Europe – Far East trade as a highly concentrated market (see Table 7 and Graph 2).

1 Most of the information available in the trade press on the North Europe – Far East trade also includes Mediterranean ports, therefore no distinction is being made in this paper between the North Europe and Europe trade. 2 The carriers COSCO, Hanjin and Senator are operating a joint service with the FEFC member K-Line. ZIM and China Shipping are operating a joint service with FEFC member Norasia.

Table 7: Competitive situation on the Europe – Far East trade

Competitive situation on the (North) Europe - Far East trade

top 4 operators on conference level Operators on alliances/consortia level

Capacity consortia/alliances or Capacity conferences, alliances/consortia or companies Share in % companies Share in % Far Eastern Freight Conference (ANL, APL, CMA Grand Alliance (Hapag- 23,6 CGM, Egyptian Int., Hapag Lloyd, Hyundai (HMM), K Lloyd, MISC, NYK, OOCL, Line, Maersk Sealand, Malaysia Intern. (MISC), Mitsui P&O Nedlloyd) (MOL), NYK, NCL, OOCL, P&O, Yangming) Non-conference members directly linked to the conference: Cosco, Hanjin, Senator, China Shipping (CSCL), ZIM 83,9 Cosco/K 22,2 MSC 6,5 Line/Hanjin/Senator Evergreen / Lloyd Triestino 6,5 Maersk Sealand 14,5 New World Alliance (APL, 11,9 PIL/Wan Hai 1,8 HMM, MOL) others 1,2 others 27,8 HHI (top 4) conference level 7.132 HHI (top 4) alliance level 1.402

Source: The Drewery annual container market review and forecast 2004/05, p.119-123, at July 2004, Dynamar web-site. Graph 1: North Europe – Far East trade – Capacity shares on conference level

North Europe - Far East trade - Capacity shares on conference level

PIL/Wan Hai others Evergreen / Lloyd Triestino

MSC

Far Eastern Freight Conference (incl. Cosco, Hanjin, Senator, CSCL, ZIM)

4. If the block exemption were to be repealed, i.e. no conference would be active on the trade, only consortia, slot charters and individual carriers have to be taken into account for a competitive analysis. In this case, the biggest capacity share would be held by the Grand Alliance (23.6%), followed by the COSCO/K- Line/Yangming/Hanjin consortium (22.2%), Maersk Sealand (14.5%) and the New World Alliance that would hold 12% of the capacity. These top4 consortia/individual carriers would have a capacity share of 72.2%. The HHI would drop from 7132 to 1402. Hence, if conferences would disappear from the trade the competitive situation would drastically improve. The market would transform in the short term from a highly concentrated market to a concentrated market in terms of capacity (see Graph 2).

Graph 2: North Europe – Far East trade – Concentration rates

North Europe - Far East trade - Concentration rates

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

Graph 3: Europe – Far East trade – Capacity shares on consortia level

North Europe - Far East trade - Capacity shares on consortia level

others

Grand Alliance PIL/Wan Hai

Evergreen / Lloyd Triestino

MSC

New World Alliance Cosco/K Line/Hanjin/Senator

Maersk Sealand

Market concentration

5. The ELAA has submitted confidential market share information on the Europe – Asia trade which largely comparable to the Europe – Far East trade. According to the ELAA market concentration is low on an individual carrier level (for the years 2002- 2003; eastbound leg: HHI 570-600 and westbound leg: HHI 600-650).3 However, the market share of the FEFC of the FEFC is high. Therefore when taking into account the FEFC conference as one economic entity, market concentration is very high (2003: eastbound HHI 5226; westbound HHI 5119). Market concentration is even higher (2003: eastbound HHI 8176; westbound HHI 8224) when five non-conference carriers are added to the conference market share that are linked with a conference member in a consortium (see Table 8).

6. The HHI drops significantly on alliance level to less than 2000 (2003: eastbound HHI 1454; westbound HHI 1359). Hence, if conference were repealed the trade would transform in the short term from a very concentrated market to a concentrated market both in terms of capacity and market shares.

3 ELAA submission dated 10 March 2005, p. 176-177, para 436-439.

Table 8: Market concentration on the Europe – Asia trade

Europe - Asia trade* Eastbound Westbound Market share in % 2000 2001 2002 2003 2000 2001 2002 2003 Hyundai APL MISC SAG PONL confidential information submitted by ELAA confidential information submitted by ELAA NYK not submittedconfidential not submitted confidential Maersk Sealand China Shipping Hapag Lloyd confidential information submitted by ELAA ANL CMA CGM K Line MOL Norasia not submitted not submitted OOCL confidential confidential Yang Ming not submitted Hanjin confidential COSCO not submitted confidential not submitted confidential Evergreen information information MSC confidential submitted by ELAA confidential submitted by ELAA

FEFC conference members (ANL, APL, CMA CGM, Egyptian Int., Hapag Lloyd, Hyundai (HMM), K Line, Maersk Sealand, Malaysia Intern. (MISC), Mitsui (MOL), NYK, NCL (Norasia), OOCL, P&O, Yangming) FEFC conference members plus non-conference carriers that are directly linked to the conference by a consortium (COSCO, Hanjin, Senator, China Shipping (CSCL), ZIM) Grand Alliance (Hapag, MISC, NYK, OOCL, PONL) CKYH Alliance (COSCO, Yang Ming, Hanjin, Senator, K Line) New World Alliance (APL, Hyundai, MOL) Sum (excluding others) Confidential information HHI (top 4) on conference level 4631 5226 5032 5119 HHI (top 4) on conference level including non-conference members directly linked 7078 8176 7896 8224 HHI (top 4) on alliance level 1500 1454 1411 1359 HHI (on individual carriers level according to ELAA) 578 598 638 625 *Source: ELAA submission dated 10 March 2005.

Market entry and exit

7. According to ELAA Cho Yang Lines went bankrupt in 2001 and left the market. On the other hand China Shipping has entered the market in 1999 and has increased its capacity in the following years. However, China Shipping that holds 6% of the capacity on the trade entered into a consortium with FEFC member Norasia and thus cannot be considered to be entirely independent from the conference. Wan-Hai and PIL entered the market in 2004 accounting for a capacity share of less than 2% of the trade.

Commodities

8. The main commodities carried eastwards are synthetic resins, waste paper, paper and paper boards, non-ferrous metals, foodstuffs requiring refrigeration, iron and steel, auto parts, chemicals and machinery/equipment.

9. The main commodities carried westwards are manufactured goods, wearing appeal, furniture, synthetic resins, office and computer machinery, metal products, plastic products, electronic articles, textiles, pottery and auto parts. According to ELAA the nature of the commodities transported leads to an equipment imbalance. Consequently, a large number of empty containers have to be repositioned.4

Customer distribution

10. According to ELAA the freight forwarders are estimated to be involved in 50% of the trade, either with direct cargo routing control or through “named accounts” where forwarder administrates and places bookings on account of shippers, who negotiate and contract with the carrier directly.5 The ELAA also presented confidential data on customer distribution on 10 of their members active in the trade. Of the 46,849 customers the ELAA classified 44,288 (95%) as small customers, 2,184 (4,6%) as medium and 377 (0,8%) as large customers.

1.1.2. Market structure and competitive situation on the Mediterranean – Far East trade

Market actors

11. On the Mediterranean – Far East trade two conferences are active, the FEFC and the Japan Mediterranean Freight Conference (JMFC). The most important members to the FEFC conference are Maersk, P&O Nedlloyd, APL and CMA CGM. Seven significant consortia are offering services on the route: Grand Alliance, New World Alliance, COSCO/K-Line/Yangming/Hanjin, Evergreen/LT, CMA CGM/Norasia/ANL, ZIM/Norasia and Evergreen/LT/Hatsu (see Table 9).

4 ELAA submission dated 10 March 2005, para 441-443. 5 ELAA submission dated 10 March 2005, para 444-445.

Capacity concentration

12. The FEFC has 15 member carriers. There are another six carriers that are not members of the FEFC but operate within a consortium with at least one conference member or are indirectly linked to FEFC.6 The aggregated capacity that is in this way directly or indirectly controlled by FEFC amounts to 85% of the capacity on the trade. The second largest supplier on the trade which is not linked to FEFC is MSC with a capacity share of 15%. These two entities control almost 100% of the capacity on the route since there are only two more carriers (United Arab and Rickmers) that together have a capacity share of less than 0.5%. The HHI equals 7431 indicating that the Mediterranean – Far East trade is a very concentrated market.

Table 9: Competitive situation on the Mediterranean – Far East trade

Competitive situation on the Mediterranean - Far East trade Top 4 operators on conference level Top 4 operators on Alliances/Consortia level

Capacity consortia/alliances or conferences, alliances/consortia or companies Capacity Share in % Share in % companies 1) Far Eastern Freight Conference (ANL, APL, 1) CMA CGM CMA CGM, Egyptian Int., Hapag Lloyd, Hyundai (includ. Norasia, APL) (HMM), K Line, Maersk Sealand, Malaysia Intern. 2) ZIM/Norasia (MISC), Mitsui OSK (MOL), NYK, Norasia 3) CSCL Container Line, OOCL, P&O Nedlloyd, Yangming) 4) CSCL/Norasia 2) Non-conference members with a direct or 5) CSCL/Norasia/ZIM indirect link to the conference through a consortium 6) Lloyd Triestino/CMA CGM with CMA CGM or Norasia, : Contship, Marfret, 7) Evergreen/Lloyd ZIM, CSCL, Lloyd Triestino, Evergreen Triestino/Hatsu 8) CMA CGM/P&O 84,9 Nedlloyd/Contship/Marfret 44,1 MSC 14,6 Cosco/K Line/Hanjin/Senator 18,6 United Arab 0,4 MSC 14,6 Rickmers (predominately break-bulk carrier) Grand Alliance (Hapag-Lloyd, 12,3 0,1 NYK, OOCL, P&O Nedlloyd) others 0,0 others 10,3 HHI (top 4) conference level 7.431 HHI (top 4) alliance level 2.659

Source: The Drewery annual container market review and forecast 2004/05, p.146-149, at July 2004, Dynamar web-site.

6 CSCL and ZIM operate a joint service with the FEFC member Norasia. Contship and Marfret co- operate with FEFC member P&O Nedlloyd. Lloyd Triestino operates a joint a service with FEFC member CMA CGM. Evergreen is not directly linked to a FEFC member in a consortium. It has however an indirect link to FEFC via its consortium partner Lloyd Triestino and its slot charterer ZIM.

Graph 4: Mediterranean – Far East trade – Capacity shares on conference level

Mediterranean - Far East trade - Capacity shares on conference level

United Arab Rickmers

MSC

Far Eastern Freight Conference (incl. Contship, Marfret, ZIM, CSCL, LT, Evergreen)

13. If no conferences were present on the trade only consortia, slot charterers and individual carriers would have to be taken into account. The biggest entity operating on the trade would be a group of 7 different consortia and one carrier, that are all interlinked among each other by slot charters and consortia (see Table 9), controlling jointly 44% of the capacity. The second largest operator would be the consortium COSCO/K-Line/Yangming/Hanjin with a capacity share of 19%, the individual carrier MSC would account for 15% of capacity and the Grand Alliance would hold 12%. These top4 entities would control almost 90% of the capacity on the trade. The top4 HHI would drop from 7431 at present to 2659 if conferences were abolished. Although the Mediterranean – Far East trade would still be considered to be very concentrated market, it would be a very significant pro-competitive move towards less concentration.

Graph 5: Mediterranean – Far East trade – Concentration rates

Mediterranean - Far East trade - Concentration rate

7.000

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

Graph 6: Mediterranean – Far East trade – Capacity shares on consortia level

Mediterranean - Far East trade - Capacity shares on consortia level

others

Grand Alliance CMA CGM/ZIM/Norasia/CSCL/Nor asia/Lloyd Triestino/Evergreen/Hatsu/P ONL/Contship/Marfret

MSC

Cosco/K Line/Hanjin/Senator

Market concentration

14. The ELAA has not provided detailed market information on the Mediterranean – Far East trade.

1.1.3. Market structure and competitive situation on the Transatlantic trade

15. The Europe – North America trade is third trade in European terms (after Far East and intra-European trade) and the fifth trade in global terms. It is further split into the Transatlantic (North Europe – North America) trade and the Mediterranean – North America trade.

Market actors

16. The Transatlantic Conference Agreement (TACA II), the Canadian Atlantic Freight Secretariat (Canada E.C.) and the West India Transatlantic Steamship Association (WITASS – Mexican Section) are active on the trade. The most important members to the TACA conference are Maersk, P&O Nedlloyd, CMA CGM and NYK Line. Important consortia that are operating on the route are: the Grand Alliance, Maersk/New World Alliance, COSCO/K-Line/Yangming/Hanjin/Senator, CMA CGM/P&O Nedlloyd/Contship/Marfret and Norasia/Gold Star/China Shipping (see Table 10).

Capacity concentration

17. The TACA conference has seven members and controls 60% of the capacity on the trade. The consortium COSCO/K-Line/Yangming/Hanjin/Senator and Evergreen both have a capacity share of 6% and ICL holds 2.5% of the trade’s capacity. The top4 entities together control 75% of the capacity of the trade. The top4 HHI equals 3714 which identifies the Transatlantic trade as a very concentrated market.

Table 10: Competitive situation on the Transatlantic trade

Competitive situation on the Transatlantic trade Top 4 operators on conference level Operators on Alliances/Consortia level

conferences, alliances/consortia Capacity Share consortia/alliances or Capacity or companies in % companies Share in % TACA II (Maersk, ACL, Hapag Lloyd, Grand Alliance/Americania 28,0 MSC, NYK, OOCL, P&O Nedlloyd), (Hapag-Lloyd, NYK, OOCL, including Grand Alliance and New P&O Nedlloyd) World Alliance 60,3 Consortium: Cosoco/Hanjin/K Line/ Maersk Sealand/New World 15,2 Yangming 6,1 Alliance Evergreen 6 MSC 11,2 Consortium: Cosco/K 6,1 ICL 2,5 Line/Hanjin/Senator others 25,1 others 39,7 HHI (top4) conference level 3.714 HHI (top 4) alliance level 1.172 Source: The Drewery annual container market review and forecast 2004/05, p.132-136, at July 2004, Dynamar web-site.

Graph 7: Transatlantic trade – Capacity shares on conference level

Transatlantic trade - Capacity shares on conference level

others

ICL

TACA II Evergreen

Cosoco/Hanjin/K Line/Yangming

18. If conferences were to be abolished, the competitive situation on the Transatlantic trade would look as follows: the biggest operator would be the Grand Alliance with a capacity share of 28%, followed by the Maersk/New World Alliance consortium (15.2%), the individual carrier MSC (11.2%) and the COSCO/K Line/Hanjin/Senator consortium (6.1%). These top4 entities would represent 60.5% of the capacity. The HHI would decrease from 3714 to 1172 and hence the Transatlantic route would convert in the short term from a very concentrated market to a concentrated market.

Graph 8: Transatlantic trade – Concentration rates

Transatlantic trade - Concentration rates

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

- HHI Conference level HHI Consortia level

Graph 9: Transatlantic – Capacity shares on consortia level

Transatlantic trade - Capacity shares on consortia level

Grand Alliance others

ICL

Maersk Sealand/New World Evergreen Alliance

Cosco/K Line/Hanjin/Senator MSC

Market concentration

19. The ELAA has submitted confidential market share information the Transatlantic trade. It generally considers market concentration to be low (2003: HHI 716 eastbound, HHI 661 westbound). Market concentration is however much higher on the conference level (2003: HHI 2944 eastbound, HHI 2698 westbound). Market concentration on conference level including non-conference carriers that operated within a consortium with a conference member is even higher (2003: HHI 5399 eastbound, HHI 4714 westbound) (see Table 11). Thus at present the Transatlantic trade is a very concentrated market. If conferences were abolished market concentration would significantly drop. The HHI would account for 2224 eastbound (very concentrated market) and 1817 westbound (concentrated market).

Table 11: Market concentration on the transatlantic trade

Transatlantic trade* Eastbound Westbound Market share in % 2000 2001 2002 2003 2000 2001 2002 2003 APL Atlantic Cargo Service Atlantic Container Line China Ocean Shipping (COSCO) Cho Yang Shipping CMA CGM DSR Senator Evergreen Hanjin Hapag Lloyd Hyundai Independent Line (ICL) K Line Lykes Line Maersk Sealand MSC TMM (Mexican Line) MOL NYK OOCL PONL Yang Ming others confidential information submitted by ELAA TACA conference members (ACL, Hapag, Maersk, MSC, NYK, OOCL, PONL) TACA conference members plus non-conference carriers that are directly linked to the conference by a consortium (Grand Alliance and New World Alliance) Grand Alliance (Hapag, MISC, NYK, OOCL, PONL, TMM Lines, Lykes) CKYH Alliance (COSCO, Yang Ming, Hanjin, K Line) New World Alliance (APL, Hyundai, MOL) and Maersk (slot charter) confidential information submitted by ELAA westbound round the world service: China Shipping/Norasia/ Gold Star RoundAlliance the world service: ANZ Alliance (CMA CGM, Contship, Hamburg Sued, Marfret, PONL) not submitted by ELAA not submitted by ELAA HHI (top 4) on conference level 2691 2694 2772 2944 2577 2554 2598 2698 HHI (top 4) on conference level including non-conference members directly linked 4046 4268 4918 5399 3691 3967 4218 4714 HHI (top 4) on alliance level 1675 1794 2125 2224 1486 1637 1719 1817 HHI (on individual carriers level according to ELAA) 737 686 684 716 674 617 640 661 *Source: ELAA submission dated 10 March 2005.

Market entry and exit

20. ELAA submitted that Cho Yang Lines went bankrupt in 2001 and left the market. In the same year Valueships announced a new service ex West Coast but failed to launch it. DSR Senator lines withdrew from the trade in 2003. At the same time the slot charter brand names CSAV and United Arab disappeared from the market.7

21. On the other hand, CMA-CGM and TMM (CP ships) entered the market in 2001. CMA CGM operates within a consortium (capacity share 1%) together with TACA member PONL. TMM entered on this trade into the Grand Alliance (capacity share 28%) that includes four TACA members. Finally, two Round-the-World services ANZ alliance (CMA-CGM, Contship, Hamburg Sued, Marfret and PONL) and China Shipping/Norasia/Gold Star (only westbound) entered the trade in 2003 and 2004 respectively, both services have minor capacity shares.

Commodities

22. The main commodities carried on the eastbound trade are wood pulp, automobiles, synthetic resins, auto parts, logs/lumber, wines/spirits, medical equipment, household goods, dry fruits, and nuts, rubber, plastic products, tobacco, chemicals, lawn and garden equipment, poultry, tires/tubes and fabrics.

23. The main commodities on the westbound trade are beer, auto parts, furniture, paper, household goods, woodenware, non-alcoholic beverages, glassware, logs/lumber, tires/tubes, machinery, plastic products, resins, foodstuffs, metal ware, engines/motors, alcoholic beverages and laundry machineries.

24. According to ELAA for some commodities demand is highly seasonal and exchange rate changes have an impact on the amount of several goods transported (especially chemicals, paper and wood).8

Customer distribution

25. The percentage of freight forwarders’ market penetration is estimated by ELAA the between 15% and 25% eastbound and 30% to 45% westbound9 The ELAA also presented confidential data on customer distribution on 9 of their members active in the trade. Of the 17296 customers the ELAA classified 16088 (93%) as small customers, 1012 (5.8%) as medium and 196 (1.1%) as large customers.

1.1.4. Market structure and competitive situation on the Mediterranean – North America trade

Market actors

26. The United States South Europe Conference (USSEC) is active on the trade and comprises the three carriers Maersk, P&O Nedlloyd and Hapag Lloyd. Another two

7 ELAA submission dated 10 March 2005, para. 413-414. 8 ELAA submission dated 10 March 2005, para 415-417. 9 ELAA submission dated 10 March 2005, para 418-419.

30 carriers are directly or indirectly linked to the conference.10 There are more than 10 different consortia operating on the trade of which the most important are P&O Nedlloyd/Hapag Lloyd/ZIM, CanMar/Senator, TMM/Lykes/(Italia), Grand Alliance, COSCO/K line/Yangming and CMA CGM/China Shipping.

Capacity concentration

27. USSEC and the two carriers that are linked have an aggregated capacity share of 45% on the route. The two consortia TMM/Lykes and TMM/Lykes/Italia jointly operate 11.6% of the capacity, the CanMar/Senator consortium accounts for 9.3% of the capacity and the individual carrier MSC controls 7% of the capacity on the Mediterranean – North America trade. These top4 entities stand for 73% of the trade’s capacity. The trade is a very concentrated market since the HHI is 2302.

Table 12: Competitive situation on the Mediterranean – North America trade

Competitive situation on the Mediterranean - North America trade Top 4 operators on conference level Top 4 operators on Alliances/Consortia level

conferences, alliances/consortia or Capacity Share consortia/alliances or Capacity Share in % companies in % companies 1) USSEC - United States South Europe Conference (Maersk, P&O Nedlloyd, Hapag Lloyd) 2) Non-conference members with a 1) PONL/Hapag Lloyd direct or indirect link to the conference 2) PONL/Hapag Lloyd/ZiM through a consortium with PONL and 3) ZIM Hapag Lloyd: ZIM, Norasia 45,1 4) ZIM/Norasia 26,7 1) TMM/Lykes 2) TMM/Lykes/Italia 11,6 Maersk Sealand 18,4 1) TMM/Lykes CanMar/Senator 9,3 2) TMM/Lykes/Italia 11,6 MSC 7,0 CanMar/Senator 9,3 others 27,0 others 34,0 HHI (top 4) conference level 2.302 HHI (top 4) alliance level 1.272

Source: The Drewery annual container market review and forecast 2004/05, p.154-156, at July 2004, Dynamar web-site.

10 ZIM operates a joint services with USSEC members P&O Nedlloyd and Hapag Lloyd. Norasia is indirectly linked to USSEC via its consortium with ZIM.

31 Graph 10: Mediterranean – North America trade – Capacity shares on conference level

Mediterranean - North America trade - Capacity shares on conference level

others

USSEC (incl. ZIM, Norasia)

MSC

CanMar/Senator

TMM/Lykes/Italia

28. If the USSEC would not be active on the trade anymore due to the abolition of the conference system, the biggest player on the trade would be a group of three interlinked consortia and one carrier (P&O Nedlloyd/Hapag Lloyd; P&O Nedlloyd/Hapag Lloyd/ZIM, ZIM/Norasia and ZIM as individual carrier) together accounting for 27% of the trade’s capacity. The individual carrier Maersk Sealand would have a capacity share of 18%, the two consortia TMM/Lykes and TMM/Lykes/Italia (11.6%) and the consortium CanMar/Senator (9.3%). The abolition of the conference system would in the short term convert the market from a very concentrated market (HHI 2302) to a concentrated market (HHI 1272). The top4 entities would only control 66% of the capacity.

32 Graph 11: Mediterranean – North America trade – Capacity shares on conference level

Mediterranean - North America - Concentration rates (capacity)

2.500

2.000

1.500

1.000

500

- HHI conference level HHI consortia level

Graph 12: Mediterranean – North America trade – Capacity shares on consortia level

Mediterranean - North America trade - Capacity shares on consortia level

PONL/Hapag others Lloyd/ZiM/Norasia

MSC

Maersk Sealand

CanMar/Senator

TMM/Lykes/Italia

Market concentration

29. The ELAA has not submitted detailed information on the Mediterranean – North America trade.

1.1.5. Market structure and competitive situation on the Europe – West Africa trade

30. The Europe – Africa trade is the fourth important European container trade, that is usually further divided into Europe - West Africa, Europe – South Africa and Europe – East Africa.

Market actors

31. On the Europe – West Africa trade the EWATA conference (Europe West Africa Trade Agreement) is active with seven members amongst which Maersk, CP Ships and Delmas. Moreover, four carriers are directly linked to the conference via consortia with the EWATA member Delmas11. There are four consortia operating on the trade: Delmas/OTAL/WAL/MOL, Delmas/OTAL, Grimaldi/Delmas/Setramar, CSAV/Montemar/Lykes.

Capacity concentration

32. EWATA and the carriers that are linked to it have a capacity share of 83% on the trade. MSC the second largest operator accounts for 7.6% of the capacity, followed by Messina (2.5%) and Baco Liner (1.8%). The conference together with the three other carriers control the 95% of the capacity on the trade and the HHI amounts to 6946.

11 The carriers are WAL, MOL, Grimaldi and Setramar.

Table 13: Competitive situation on the Europe – West Africa trade Competitive situation in the Europe - West Africa trade Top 4 operators on conference level Top 4 operators on alliances/consortia level conferences, alliances/consortia or Capacity Capacity consortia/alliances or companies companies Share in % Share in % Europe West Africa Trade Agreement; 82,9 Maersk/Safmarine 42,0 Members: CSAV/Libra, Delmas, Maersk/Safmarine, Lykes/TMM/CP Ships, Nile Dutch Africa Line, OT Africa Line (OTAL), TMM Lines Non-conference members with a direct or indirect link to the conference: WAL, MOL, Grimaldi, Setramar MSC 7,6 1) Delmas/OTAL/WAL/MOL grouping 26,3 2) Delmas/OTAL (both Northern Europe/Portugal)

2,5 1) Grimaldi 10,0 2) Grimaldi/Delmas/Setramar Messina (both Southern Europe) Baco Liner 1,8 MSC 7,6 others 5,2 others 14,2 HHI (top 4) conference level 6.946 HHI (top 4) alliance level 2.613

Source: The Drewery annual container market review and forecast 2004/05, p.187-192, at July 2004, Dynamar web-site.

Graph 13: Europe – West Africa trade – Capacity shares on conference level

Europe - West Africa trade - Capacity shares on conference level

others Baco Liner Messina

MSC

Europe West Africa Trade Agreement (incl. WAL, MOL, Grimaldi, Setramar)

33. If conferences were abolished, the biggest single operator would be Maersk representing a capacity share of 42%, the two consortia Delmas/OTAL/WAL/MOL and Delmas/OTAL which operate out of North Europe would have a joint capacity share of 26%. The third largest entity operates out of Southern Europe, consisting of Grimaldi and the consortium to which Grimaldi belongs (Grimaldi/Delmas/Setramar), has a capacity share of 10%.12 The top4 entities are completed by the individual carrier MSC (7.6%) and would together hold a capacity share of 86%. The HHI amounts to 2613, which indicates that the trade remains a very concentrated market even if conferences were abolished. Nevertheless an abolition of conferences would have a substantial pro-competitive effect on the trade, since the concentration rate would decrease in the short term by more than 4000 points and the largest entity would only account for half of the capacity than before, i.e. reduction from 83% to 42%.

12 The carrier Delmas belongs to three different consortia on this trade. Since the first two only operate out of North Europe (Delmas/OTAL/WAL/MOL and Delmas/OTAL) and the third consortium (Grimaldi/Delmas/Setramar) only operates out of Southern Europe. Therefore the capacity shares have only been aggregated for the first two consortia as there might not be any geographical overlap between the first two and the third consortium. Thus, the carrier Delmas belongs to two different entities on this trade.

Graph 14: Europe – West Africa trade – Concentration rates

Europe - West Africa trade - Concentration rates

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

Graph 15: Europe – West Africa trade – Capacity shares on consortia level

Europe - West Africa trade - Capacity shares on consortia level

others

Baco Liner Messina

MSC

Maersk/Safmarine

Grimaldi/Delmas/Setramar

Delmas/OTAL/WAL/MOL

Market concentration

34. The ELAA considers Maresk, Safmarine (a subsidiary of Maersk), Delmas, OTAL (a subsidiary of Delmas), MOL (operates in a consortium with Delmas), MSC, CSAV, Grimaldi and Messina to be the main players on the trade.

35. “Market concentration is not known with certainty due to a lack of data; however, given the amount of active participants in the trade we [ELAA] assume it to be relative.”13 Given the capacity distribution it is however highly likely that market concentration on this trade is very high at present (on conference level) and at least concentrated if conferences were abolished (i.e. on alliance level).

13 ELAA submission dated 10 March 2005, para 487.

Table 14: Market concentration on the Europe – West Africa trade

Europe - West Africa trade* Southbound Northbound Market share in % 2000 2001 2002 2003 2000 2001 2002 2003 Maersk Sealand/ Safmarine Delmas/OTAL/Setramar Nile Dutch Africa Lines CSAV CP Ships (TMM, Lykes) CSAV/Libra Grimaldi/Gilnavi MSC According to ELAA market shares According to ELAA market shares Baco Liner could not be determined with reasonable could not be determined with reasonable Messina clarity clarity EWATA conference members (Maersk/Safmarine, Delmas/OTAL, Nile Dutch Africa Line, since 2005: CSAV/Libra, CP ships/Lykes/TMM) Consortium: Delmas/Setramar, Gilnavi/Grimaldi According to ELAA market shares According to ELAA market shares Consortium: Delmas/OTAL/Setramar, MOL could not be determined with reasonable could not be determined with reasonable Consortium: CSAV, CP Ships clarity clarity HHI (top 4) on conference level

HHI (top 4) on conference level including non-conference members directly linked HHI (top 4) on alliance level According to ELAA concentration levels According to ELAA concentration levels HHI could not be determinded with reasonable could not be determinded with reasonable (on individual carriers level according to ELAA) clarity clarity *Source: ELAA submission dated 10 March 2005. Market entry and exit

36. Three carriers were reported to have entered in 2002: CSAV, MOL and Zenith.14 It has to be noted that MOL entered into an existing consortium with the conference member Delmas. CSAV entered into a consortium with conference member Lykes (only southbound). Zenith is carrier that is not separately listed in the Drewry report for this trade and moreover it does not appear among the top100 liner shipping companies on the Dynamar web-site, hence it appears to be a marginal multi-purpose service.15 On the other hand PONL with drew from the trade in 2003 and West- Afrika-Linien Dienste (WAL) withdrew in 2004.

Commodities

37. The main commodities carried southwards are consumer goods, milk, foodstuff and building material.

38. The main commodities carried northwards are cocoa, cotton, coffee, timber, rubber and seafood.16 The developing economies of Africa rely heavily on exports of these commodities to. They are all relatively low value commodities. Therefore liner freight rates have a particularly high percentage in the prices of these commodities (see Table 15). Hence, if conferences were abolished and liner freight rates on EU trades would drop subsequently, the prices of these commodities would significantly drop on EU markets. Demand for these commodities would rise and consequently

14 ELAA submission dated 10 March 2005, para 485. 15 Drewry container market review 2004/05, p. 198-190. 16 ELAA submission dated 10 March 2004, para 468-487.

39 exports to the EU would increase. Since the profits of the developing countries on these commodity would not alter by a drop in transport prices - they might even increase depending on respective demand elasticities –, the developing countries would benefit to a great extent from the liberalisation of the liner shipping sector.

Table 15: Ratio of liner freight rates to prices of selected (low value) commodities

Ratio of liner freight rates to prices of selected commodities Freight rate as percentage of price Commodity Route 2003 Rubber Singapore/Malaysia-Europe 8,3 Jute Bangladesh-Europe 29 Cocoa beans Ghana-Europe 3,3 Cocoa beans Brazil-Europe n.a. Coconut oil Sri Lanka-Europe 11,5 Tea Sri Lanka-Europe 7,8 Coffee Brazil - Europe 6,8 Coffee Colombia (Atlantic)-Europe 3,9 Coffee Colombia (Pacific)-Europe 4,8 Source: UNCTAD Review of Maritime Transport 2004. Customer distribution

39. The percentage of cargo controlled/booked by freight forwarders is estimated by ELAA to be 60-75% (southbound). The northbound trade shows a low freight forwarder involvement (around 5%).17 The ELAA has not submitted customer distribution data for this trade.

1.1.6. Market structure and competitive situation on the Europe - South Africa trade

Market actors

40. The Europe Southern Africa Conference (ESAC) is active on the trade with the members P&O Nedlloyd, Maersk/Safmarine, Deutsche Afrika Linien (DAL), Transatlantic Southern Africa Services (TSA), Consortium Hispania Lines (CHL) and MACS. This conference accounts for 60% of the trade’s capacity. The second largest entity is the individual carrier MSC (36% capacity share) and the carrier Messina accounting for the remaining capacity share. Hence there are only three entities operating on the trade, with is reflected in the HHI of 4983 that indicates a highly concentrated market.

Capacity concentration

41. An abolition of conferences would a priori not change the competitive situation on this trade. The biggest operator on the trade in the absence of conferences would be the SAECS consortium18 together with the individual services of MACS that is also a member of SAECS. However, the members of SAECS are identical to those of the ESAC conference and hence also the capacity shares. The capacity share of the other two independent carriers (MSC and Messina) would naturally remain unchanged if

17 ELAA submission dated 10 March 2004, para 488. 18 SAECS has a market share between 50-60%. Source: Case COMP M 3576.

40 the conference would cease to exist. Therefore, also the HHI would remain unchanged at 4983.

Table 16: Competitive situation on the Europe – South Africa trade

Competitive situation in the Europe - South Africa trade Top 4 operators on alliances/consortia Top 4 operators on conference level level conferences, alliances/consortia Capacity Share consortia/alliances or Capacity or companies in % companies Share in % Europe Southern Africa Conference; 60,4 1) SAECS* (P&O Nedlloyd, 60,4 Members: SAECS members (P&O Maersk/Safmarine, DAL, TSA, Nedlloyd, Maersk/Safmarine, DAL, CHL, MACS) TSA, CHL, MACS) 2) MACS

MSC 36,4 MSC 36,4 Messina 3,2 Messina 3,2 others - others - HHI conference level 4.983 HHI alliance level 4.983

Source: The Drewery annual container market review and forecast 2004/05, p.183-187, at July 2004, Dynamar web-site.

* SAECS has a market share between 50-60%, Source: Case COMP M 3576. Graph 16: Europe – South Africa trade – Concentration rates

Europe - South Africa trade - Concentration rates

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

41 Graph 17: Europe – South Africa trade – Capacity shares on conference level

Europe - South Africa trade - Capacity shares on conference level

Messina

MSC

Europe Southern Africa Conference

Graph 18: Europe – South Africa trade – Capacity shares on consortia level

Europe - South Africa trade - Capacity shares on consortia level

Messina

MSC

SAECS/MACS

Market concentration

42. The ELAA has not provided detailed market information on the Europe – South Africa trade.

1.1.7. Market structure and competitive situation on the Europe – East Coast South America trade

43. The Europe – Latin America trade is an important European and global trade. It is usually further divided into Europe - East Coast and West Coast South America and Europe – Caribbean.

Market actors

44. The North Europe South America East Coast Conference (EECSAC) has been suspended in March 2004 by agreement of all the carriers that resulted from a general dissatisfaction by the carriers with the returns from their conference membership. The suspension of the conference has so far not had any significant effect on the services on the trade, in particular as regards regularity of services or rate fluctuations.

Capacity concentration

45. The EECSAC conference and two directly linked carriers19 controlled together 68% of the trade’s capacity. MSC the second largest independent entity controls 23% of the capacity. The consortium New Seagull service (Costa Container Lines/Gilnavi and Maruba) has a capacity share of 7% and Grimaldi Lines the remaining 1.8%. Hence, at the time the conference was still operational the top four entities controlled the entire capacity on the trade and the HHI amounted to 5207 (very concentrated market).

19 The two Non-EECSAC members Niver Lines and ZIM were directly linked within the New Sirius service to the EECSAC members CSAV (including Ybarra and Libra), Hamburg Sud, CSAV and CMA CGM.

Table 17: Competitive situation on the Europe – East Coast South America trade

Competitive situation on the Europe - East Coast South America trade Top 4 operators on conference level Top 4 operators on alliances/consortia level

conferences, alliances/consortia or Capacity Capacity consortia/alliances or companies companies Share in % Share in %

EECSAC Conference has been suspended 67,9 1) New Sirius service [CSAV - Libra, Ybarra 45,9 in March 2004, Members: P&O Nedlloyd, CMA CGM, Zim, Hamburg Sued (HSDG), Hamburg Sud (HSDG) - Alianca, CMA CGM, Niver Lines); Hapag Lloyd, CP Ships (Contship), 2) P&O Nedlloyd consortium with Hamburg CSAV/Libra, Montemar, Maersk-Safmarine, Sud (HSDG)/Alianca/CMA CGM*; NYK, Senator Lines. 3) VSA 4 [CSAV/Montemar, CP Ships/Lykes Non-conference members directly or indirectly Lines] linked to the conference: Niver Lines, ZIM.

MSC 23,3 MSC 23,3 New Seagull service (Costa Container 7,0 Maersk Sealand/Safmarine 22,1 Lines/Gilnavi, Maruba) Grimaldi Lines 1,8 New Seagull service (Costa Container 7,0 Lines/Gilnavi, Maruba) others 0,0 Grimaldi 1,8 HHI (top 4) conference level 5.207 HHI (top 4) alliance level 3.180

Source: The Drewery annual container market review and forecast 2004/05, p.166-169, at July 2004, Dynamar web-site. * This consortium has a market share between 40-50% Source: Case COMP M 3576. Graph 19: Europe – East Coast South America trade – Capacity shares on conference level

Europe - East Coast South America trade - Capacity shares on conference level

Grimaldi Lines New Seagull service

MSC

EECSAC Conference (incl. Niver Lines, ZIM)

44 46. Since the EECSAC conference is not operational anymore the competitive situation has changed. The biggest operator on the trade is now a group of three consortia (1. New Sirius service [CSAV/CMA CGM/ZIM/HSDG]; 2. P&O Nedlloyd/HSDG/Alianca/CMA CGM20; 3. VSA 4 [CSAV/CP Ships]) that are interlinked with each other holding 46% of the capacity. MSC remains the second largest operator with 23% followed by the carrier Maersk/Safmarine (22%) and the consortium New Seagull service (7%). Consequently, the HHI dropped from 5207 to 3180 since the conference is no longer active on the trade.

Graph 20: Europe – East Coast South America trade – Concentration rates

Europe - East Coast South America trade - Concentration rates

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

20 This consortium has a market share between 40 - 50%. Source: Case COMP M 3576.

Graph 21: Europe – East Coast South America trade – Capacity shares on consortia level

Europe - East Coast South America trade - Capacity shares on consortia level

Grimaldi Lines New Seagull service

Maersk Sealand/Safmarine New Sirius service, P&O Nedlloyd/HSDG/Alianca/CMA CGM, VSA 4

MSC

Market concentration

47. The ELAA has not provided detailed market information on the Europe – East Coast South America trade.

1.1.8. Market structure and competitive situation on the Europe – West Cost South America trade

Market actors

48. The trade is dominated by the European / South Pacific and Magellan Freight Conference with it’s membes P&O Nedlloyd, CMA CGM, CSAV, ECL, Hamburg Sud (HSDG), Hapag Lloyd and K Line. The carrier CCNI operates the consortium “Med Andes” together with the conference member CSAV and is therefore directly linked to the conference. Apart from Med Andes, the consortium Eurosal with it’s members P&O Nedlloyd, Hapag Lloyd, Hamburg Sud, CMA CGM and CSAV is offering services on the trade. The remaining carriers are Maersk Sealand, MSC, Evergreen and Equadorian Line.

Capacity concentration

49. The Conference together with the carrier CCNI hold a capacity share of 60% on this trade. Maersk Sealand controls 22% of the capacity followed by MSC with 10% and

46 Evergreen (5%).21 These top4 entities control together more than 95% of the capacity. The top 4 HHI accounts for 4137 which displays the Europe - West Coast South America trade as a very concentrated market.

Table 18: Competitive situation on the Europe – West Coast South America trade

Competitive situation on the Europe - West Coast South America trade Top 4 operators on conference level Top 4 operators on alliances/consortia level

conferences, alliances/consortia or Capacity Capacity Share in consortia/alliances or companies companies Share in % % European / South Pacific & Magellan 59,6 1) Eurosal (P&O Nedlloyd, Hapag, 59,6 Freight Conference; Hamburg Sud (HSDG), CMA CGM, Members: P&O Nedlloyd, CMA CGM, CSAV CSAV, ECL, HSDG, Hapag, K Line 2) Condor Express (CCNI) Non-conference member directly linked to 3) Med Andes (CSAV/CCNI) the conference: CCNI 4) P&O Nedlloyd Maersk Sealand 21,5 Maersk Sealand 21,5 MSC 10,0 MSC 10,0 Evergreen 4,8 Evergreen 4,8 others 4,1 others 4,1 HHI (top 4) conference level 4.137 HHI (top 4) alliance level 4.137

Source: The Drewery annual container market review and forecast 2004/05, p.177-178, at July 2004, Dynamar web-site. Graph 22: Europe – West Coast South America trade – Capacity share on conference level

Europe - West Coast South America trade - Capacity shares on conference level

others Evergreen

MSC

European / South Pacific & Maersk Sealand Magellan Freight Conference (incl. CCNI)

21 Maersk, MSC and Evergreen are operating relay services via USA, Kingston and Freeport.

50. If the conference would not be allowed anymore on the trade the competitive situation would not change since there would be four interlinked operators that jointly control a capacity share identical to that controlled by the conference (60%). Most of the members of the conference are also operating within the consortium Eurosal22. Moreover, Eurosal member P&O Nedlloyd operates a separate service. CSAV, that is also a member to Eurosal, additionally operates the Med Andes service with CCNI. Finally, CCNI also offers an individual service on the route. The other top4 independent operators that are not linked to the above mentioned four consortia are Maersk Sealand, MSC and Evergreen. Hence the top4 HHI remains at 4137.

Graph 23: Europe – West Coast South America trade – Concentration rates

Europe - West Coast South America trade - Concentration rates

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

- HHI conference level HHI consortia level

22 P&O Nedlloyd, Hapag, Hamburg Sud, CMA CGM and CSAV.

Graph 24: Europe – West Coast South America trade – Capacity shares on consortia level

Europe - West Coast South America trade - Capacity shares on consortia level

others Evergreen

MSC

Maersk Sealand Eurosal, Condor Express, Med Andes, P&O Nedlloyd

Market concentration

51. The ELAA has not provided detailed market information on the Europe – West Coast South America trade.

1.1.9. Market structure and competitive situation of the Europe – Australia trade

Market actors and capacity concentration

52. The Europe – Australia/New Zealand trade is a minor trade both in European and global terms. There are three conferences active on the trade the Europe to Australia and New Zealand Conference, the Australia to Europe Liner Association and the New Zealand European Shipping Association to which P&O Nedlloyd, Contship, CMA CGM, Marfret, Hapag Lloyd, HSDG and CHL are members. These conferences account for 72% of the capacity. Apart from the conferences only the individual carrier MSC offers services on the route and consequently holds the remaining 28% of the capacity. The HHI is 5981 which corresponds to a very concentrated market.

Table 19: Competitive situation on the Europe – Australia trade

Competitive situation in the Europe - Australia trade Top 4 operators on conference level Top 4 operators on alliances/consortia level conferences, alliances/consortia Capacity Capacity Share consortia/alliances or companies or companies Share in % in % Europe to Australia and New 72,2 Consortium*: P&O Nedlloyd, 72,2 Zealand Conference; Contship, CMA CGM, Marfret Australia to Europe Liner Association; New Zealand European Shipping Association; Members to all three conferences: P&O Nedlloyd, Contship, CMA CGM, Marfret, Hapag, HSDG, CHL

MSC 27,8 MSC 27,8 others 0 others 0 HHI 5.981 HHI 5.981

Source: The Drewery annual container market review and forecast 2004/05, p.159-160, at July 2004, Dynamar web-site. * This consortium has a market share between 50-60%, Source: Case COMP M 3576. Graph 25: Europe – Australia trade – Capacity shares on conference level

Europe - Australia trade - Capacity shares on conference level

MSC

Europe to Australia and New Zealand Conference

53. A removal of the conferences on this trade would not significantly change the competitive situation on the trade the members to the conferences and the consortium (P&O Nedlloyd/Contship/CMA CGM/Marfret) that is operating on the trade are identical. The trade would remain a very concentrated market (HHI 5981).

Graph 26: Europe – Australia trade – Concentration rates

Europe - Australia trade - Concentration rates

7.000

6.000

5.000

4.000

3.000

2.000

1.000

- HHI conference level HHI consortia level

Graph 27: Europe – Australia trade – Capacity shares on consortia level

Europe - Australia trade - Capacity shares on consortia level

MSC

PONL/Contship/CMA CGM/Marfret

Market concentration

54. The ELAA submitted confidential market share information on the Europe – Oceania trade which is not a standard trade definition (of Drewry) but seems to correspond to the Australia – Europe trade. The ELAA indicates 14 carriers to be active on the Europe – Oceania trade while Drewry shows five carriers for the Europe – Australia trade. The difference might be explained by the ELAA assertion that the Europe – Oceania trade “is frequently entered for limited periods of time by so-called ‘Relay Carriers’.”23 We have not been able to confirm the ELAA statement by the Drewry Container Market Review. Moreover, the ELAA also states that the trade is served directly only by one consortium and a single independent carrier. In addition to that the ELLA claims that there are significant transhipment services via Singapore and other Asian hubs.24

55. According to ELAA market concentration level are difficult to estimate due to the “frequent entry and exit of relay services”. In addition, relay services play a significant role in the market. The ELAA estimates the HHI around 1770 for the southbound and slightly above 2000 for the northbound trade (individual carrier level), which indicates a concentrated and very concentrated market respectively. Even if one accepts the alleged hit-and-run entry of ‘relay carriers’ the trade is at

23 ELAA submission dated 10 March 2005, para 465. 24 ELAA

52 present a very concentrated market. The HHI on conference level is 4065 (Southbound) and 3544 (Northbound). The abolition of conferences would not significantly alter market concentration on this trade since the market concentration rates is identical on alliance level.

Table 20: Market concentration on the Europe – Oceania trade

Europe - Oceania trade* Southbound Northbound Market share in % 2000 2001 2002 2003 2000 2001 2002 2003 MOL Maersk Sealand CP ships (Contship) PONL Hapag Lloyd confidential information submitted by ELAA confidential information submitted by ELAA CMA CGM MSC APL MISC OOCL COSCO Evergreen Hanjin NYK not submitted by ELAA confidential not submitted by ELAA confidential TEANZC, AELA and NZESA conferences (members to all three conferences CP ships [Contship], Consortium Hispania Lines, CMA CGM, Hamburg Sued, Hapag Lloyd, Marfret, PONL) Consortium (PONL, Contship, CMA CGM, Marfret, Hapag, Hamburg Sued) confidential information confidential information HHI (top 4) on conference level 4065 3544 HHI (top 4) on alliance level 4065 3544 HHI (on individual carriers level according to ELAA) not submitted by ELAA1770 not submitted by ELAA above 2000 *Source: ELAA submission dated 10 March 2005. Market entry and exit

56. The Europe - Oceania trade faces as mentioned above hit and run entry for limited periods from so-called ‘relay carriers’. Their entry depends according to ELAA on the developments on the Europe – Asia trade and the Asia – Oceania feeder services. The ELAA has however not provided any concrete evidence for this phenomenon.

Commodities

57. The main commodities carried southwards are paper, non-metallic products, synthetic resins, machinery/equipment and motor vehicles.

58. The main commodities carried northwards are vegetables/fruits, meat/diary products, fish, beverage and leather products. The nature of the commodities transported leads according to ELAA to significant equipments imbalances.

Customer distribution

59. The ELAA estimates freight forwarder involvement between 13% and 50% northbound and 45% to 83% southbound. The ELAA also presented confidential data on customer distribution on 6 of their members active in the trade. Of the 6900

53 customers the ELAA classified 6295 (91%) as small customers, as medium 555 (8%) and 50 (0.7%) as large customers.

1.1.10. Market structure and competitive situation on a number of smaller trades

60. In the context of market investigations25 the Commission has acquired some further but not complete market information on three smaller trades – Europe-Caribbean, Europe-East Africa and Europe – India/Pakistan.

61. The conferences that are active on the Europe-Caribbean trade are the Association of West India Trans-atlantic Steam Ship Lines and the New Caribbean Service Rate Agreement. The members to both conferences are: P&O Nedlloyd, Hapag, Hamburg Sud, CMA CGM and CSAV. The leading consortium on the trade is the New Carol Service. It holds a market share between 60-70% and the members are identical to those of the conferences. Without having full market share information, it is nevertheless clear that the trade is a very concentrated market26 even if there would not be a conference active on the trade. Moreover, since the members of the consortium New Carol Service and the conferences members are identical, it can be assumed that a removal of the conference system would not significantly alter the competitive situation on the trade.

62. The Europe East Africa conference and the North Europe Djibouti conference are active on the Europe – East Africa trade with the members: MSC, P&O Nedlloyd, WEC and Kenia National Shipping Line27. MSC and it’s slot charterer P&O Nedlloyd hold a market share of 40-50%28. This very limited market share information indicates that the trade is at least a concentrated market29 even in the absence of conferences. Since the other two conference carriers on the trade WEC and Kenia National are not major international carriers, it is highly unlikely that the removal of conferences would significantly change the competitive situation on the trade.

63. On the Europe – India/Pakistan trade the India-Pakistan-Bangladesh-Ceylon Conferences are active with the following 17 members: P&O Nedlloyd, CP Ships (Contship), CMA CGM, Hapag Lloyd, Hamburg Sud, Evergreen, K Line, MacAndrews, Maersk/Safmarine, MICS, Norasia, PNSC, Rickmers, Shipping Line of India, UAS, Yang Ming and ZIM. The EPCI consortium (P&O Nedlloyd, CP Ships, CMA CGM, Hapag Lloyd and Hamburg Sud) holds a market share between 20-30%. It is not possible to determine the concentration rate of this trade with the available information. However, given the very high number of conference members in this trade, it is very likely the trade is a very concentrated market and that an abolition of conferences on this trade would have a significant pro-competitive effect.

25 Case COMP M 3576. 26 Only taking the one available market share (60-70%), the HHI would be in any case above 3,600. 27 Kenia National Shipping Line is only a member to the Europe East Africa conference. 28 Source: Case COMP M 3567. 29 Only taking the one available market share (40-50%), the HHI would be in any case above 1,600.

Table 21: Competitive situation on a number of smaller trades

Competitive situation on some smaller trades in 2003

Trade Market share of consortia* Market share of conferences* confidential (Association of West India Trans-Atlantic 60-70% Steam Ship Lines and for US trade New New Carol Service; Caribbean Rate Agreement; Members: Europe - Members: P&O Nedlloyd, Hapag, P&O Nedlloyd, Hapag, Hamburg Sud, Caribbean Hamburg Sud, CMA CGM, CSAV CMA CGM, CSAV confidential Europe East Africa conference Members: MSC, P&O Nedlloyd, Kenia National Shipping Line, WEC Europe - 40-50% North Europe/Djibouti Conference East Africa MSC with slot charterer P&O Nedlloyd Members: MSC, P&O Nedlloyd, WEC confidential India-Pakistan-Bangladesh-Ceylon Conferences: Members: P&O Nedlloyd, CP Ships 20-30% (Contship), CMA CGM, Hapag, Hamburg EPIC Sud, Evergreen, K Line, MacAnrews, Members: P&O Nedlloyd, CP Ships Maersk/Safmarine, MISC, Norasia, Europe - (Contship), CMA CGM, slot charters PNSC, Rickmers, Shipping Line of India, India/Pakistan Hapag and Hamburg Sud UASC, Yang Ming, ZIM.

confidential Europe to Australia and New Zealand Conference; Australia to Europe Liner 50-60% Association and New Zealand European Europe - Consortium: P&O Shipping Association to which the not Australia/New Zealand Nedlloyd/Contship/CMA CGM/Marfret named consortium is a member confidential 50-60% Europe Southern Africa Conference; SAECS Members: All SAECS consortium Members: P&O Nedlloyd, MSL, members: P&O Nedlloyd, MSL, Northern Europe - Maersk/Safmarine, DAL, TSA, CHL, Maersk/Safmarine, DAL, TSA, CHL, South Africa MACS MACS Europe - 40-50% East Coast South Consortium: P&O Nedlloyd, Hamburg Conference has been America Sud, CMA CGM suspended in March 2004 * Sources: For precise market share data see notification Case No COMP M 3576; Dynamar web-site. 1.1.11. Summary and conclusions

64. We have examined the competitive situation on 12 European liner shipping trades. It appears that all trades are at present very concentrated markets. An abolition of conferences would affect the trades in question to different degrees.

55 Market and capacity concentration

65. In case the conference block exemption would be repealed the trades North Europe – Far East, Transatlantic and Mediterranean – North America would transform from very concentrated markets to concentrated markets. On the trades Mediterranean – North America, Europe – India/Pakistan, Europe – East Coast South America and Europe – West Africa, the concentration rate would drastically decrease. However, these trade would remain very concentrated markets. Finally, on the Europe – South Africa, Europe – East Africa, Europe – West Coast South America, Europe – Carribbean and Europe – Australia the concentration rate would remain unchanged.

66. Hence three groups of liner shipping trades can be distinguished in respect of the pro-competitive effects an abolition of the conference system would trigger on the trades in question. The first group is most affected and contains three trades out of the four most important European liner trades. The second group would face less but still very significant pro-competitive changes. It comprises two important East-West and the two most important North-South trades. No significant pro-competitive effects could be expected from the abolition of conferences within the third group, it includes five minor North-South trades.

67. The results lead to two conclusions: Firstly, even if the repeal of Regulation 4056/86 would lead to an increase in merger activities, it is very unlikely that this would result in a significant increase in concentration on a global scale. Moreover, on a route-by-route basis a merger between two individual carriers operating in the same consortium on a specific route would not change the competitive analysis of the route in question. Secondly, the effects of the abolition of conferences appears to correlate with the size of the trade, i.e. the abolition of conferences would have considerable pro-competitive effects on the major East - West trades, while the minor North – South trades are much less affected by a regulatory change

68. The correlation between trade size and pro-competitive effects of the removal of conferences can be explained by the number of consortia and carriers that are operating on a particular trade. On minor trades there is usually only one consortium operating.

Market entry and exit

69. The ELAA reported a few examples of successful market entries on four trades over the last three years, however none of these carriers was a real newcomer to liner shipping. On the Australia trade, the ELAA informs on hit-and-run entry of relay carriers, which does not proof fierce competition on the trades since their market shares are marginal. It does however show that carriers are apparently able to quickly react to market changes and adopt the deployment of the vessels and scheduling of services.

Commodities

70. It appears that on the northbound trades from Africa to EU the vast majority of cargo carried are low-value commodities. A liberalisation of liner shipping could lead to significant transport price reductions of these commodities and increased demand for these goods. In addition, import prices of consumer goods that are carried

56 southbound may also drop. As a result a considerable improvement of the terms of trade of the developing African countries can be expected.30

Customer distribution

71. The ELAA data revealed that more than 90% of all customers on the three trades were data is available are small shippers. These small shippers do not have any buyer power. The ELAA notes that some small shippers may be organised in “shippers associations” that are able to obtain contractual concessions from carriers, with little or no rate increase.31 This however means these small shippers are at best able to equalise their disadvantage of being small. In contrast, buyer power is characterised the ability to negotiate rate reductions.

72. The ELAA also hints at a high rate of freight forwarder penetration on the Transatlantic (eastbound: 15-25%, westbound 30-45%) and Far East trade (50%), which appears to relate to the volume cargo and not the distribution of customers.

Table 22: EU carriers’ profitability

Profitability of selected European carriers -results for 2003 Operating profit in Mio US$ carrier nationality 2002 2003 change CMA CGM F 110 318 189% CP Ships UK-CDN 76 102 34% Hapag-Lloyd D 90,7 310 242% AP Moeller* DK 58,7 648 1004% P&O Nedlloyd UK-NL -234 77 * net profit Source: Drewry Shipping Consultants

Table 23 Top 10 carriers’ North-South Trades

30 See also the World bank study of Fink et al (2002) which examines the effects of liner transport prices on international trade. 31 ELAA submission dated 10 March 2005, para 277.

57 Top 10 carriers on North - South Trades (Jan. 2004) Carrier Operating names Nationality Total ships Share in % AP Moeller Maersk Sealand, Safmarine DK 113 18.1 MSC MSC CH 78 12.5 P&O Nedlloyd P&O Nedlloyd, EHCL UK-NL 60 9.6 Hamburg Sued Hamburg Sued, Aliance, Ellerman D 53 8.5 CSAV group CSAV, Montemar, Libra, ECL F 39 6.2 Bollore group Delmas, OTAL F 29 4.6 CMA CGM CMA CGM, ANL F 28 4.5 CP Ships Contship, Lykes, TMM, ANZDL, Italia CDN 23 3.7 NYK NYK Jap 19 3.0 MOL MOL Jap 18 2.9 Total top 5 343 54.9 Total top 10 460 73.6 other carriers 165 26.4 Total 625 100 Source: Lloyd's List Shipping Economist, May 2004, p. 15

Table 24: Top charter lines

Rank Rank Operator Total Owned Owned Chartered Chartered (Chartered (Operated (Parent or main operated capacity capacity capacity capacity Capacity) Capacity) company) TEU TEU in % TEU in % 1 1 Maersk Sealand 1.027.200 587.300 57% 439.900 43% 2 4 P & O Nedlloyd 436.300 140.400 32% 296.000 68% 3 5 CMA CGM 402.600 129.200 32% 273.400 68% 4 7 Hanjin 295.000 70.000 24% 225.100 76% 5 14 CSAV 204.500 1.600 1% 202.900 99% 6 2 MSC 660.700 459.500 70% 201.200 30% 7 6 APL 316.300 129.900 41% 186.400 59% 8 10 China Shipping 272.200 121.100 44% 151.100 56% 9 8 NYK 284.900 161.200 57% 123.800 43% 10 19 Hamburg Sud 164.800 52.900 32% 111.900 68% 11 13 "K" Line 207.500 105.000 51% 102.400 49% 12 12 ZIM 210.000 109.000 52% 101.000 48% 13 20 Hyundai 148.700 55.300 37% 93.400 63% 14 3 Evergreen 441.600 348.400 79% 93.200 21% 15 11 OOCL 229.300 141.900 62% 87.400 38% 16 15 MOL 199.400 113.300 57% 86.100 43% 17 17 CP Ships 191.600 107.200 56% 84.300 44% 18 16 Hapag-Lloyd 195.400 117.400 60% 78.000 40% 19 9 Coscon 283.100 218.600 77% 64.400 23% 20 18 Yang Ming 178.600 120.000 67% 58.600 33% 21 21 PIL 126.600 68.800 54% 57.800 46% 22 22 Wan Hai 94.100 57.900 62% 36.200 38% 23 31 Sea Consortium 30.700 0 0% 30.700 100% 24 33 CCNI 29.200 0 0% 29.200 100% 25 30 Costa 34.400 5.700 17% 28.700 83% 26 32 Sinotras 30.600 2.100 7% 28.500 93% 27 24 Delmas 60.900 34.700 57% 26.200 43% 28 37 Samudera 24.200 1.600 7% 22.600 93% 29 36 Finnlines 24.700 2.300 9% 22.300 90% 30 42 Schoeller Group 20.700 0 0% 20.700 100%

Total of the above companies 6.825.800 3.462.300 51% 3.363.400 49% Total of the liner fleet (owned & chartered) 8.310.400 4.237.000 51% 4.073.400 49%

Source: Dynamar 11A/2005 of 18 March 2005