Maritime freighters beware monopoly
20 February, 2014
Maritime freighters beware monopoly
International maritime shipping companies are increasingly wary of an emerging monopoly on terminal business in Poti. Eight terminals owned and run by international maritime shipping companies there fear they will be shut down soon if the Revenue Service (RS) of Georgia, part of the Ministry of Finances (MOF), does not put all market players under equal conditions.
According to Irakli Iashvili, Chairperson of the Supervisory Council of East Gate Group (affiliated with the French-based CMA CGM, the third largest container
transportation company in the world), starting this May the RS plans to give an exclusive right of customs declaration on containers to the terminal owned by APM Terminals, a unit of Denmark’s A.P. Moller-Maersk, the largest container ship operator in the world, which also owns and manages the Poti Port along with the adjacent Poti Free Industrial Zone.
The point is that the Maersk terminal is located in the Clearance Economic Zone (CEZ) created by the state in 2011 for customs clearance procedures. This puts the terminal in a privileged position to become a market monopolist, while undermining the transit image and infrastructure of Georgia.
“All international shipping lines operating in Georgia have their own terminals in Poti, as in any other port around the globe; this enables each company to define its unified service and pricing policy throughout the worldwide network, and be competitive,” Iashvili elaborated in an interview with Georgian Journal. “These terminals have been operating here for 20 years already, and have their established service terms. But once all containers in Poti must take their cargos for customs declaration to Maersk terminal only, they become dependent on Maersk tariffs, which very likely will go much higher and consequently kill competition. We will go bankrupt, and around two thousand people employed by the terminals will lose their jobs.”
In fact the problem of international shipping lines in Poti started in 2011 when the former government began development of the state-owned CEZ throughout Georgia. MOF assured that the state-owned CEZ was introduced to make doing business easier, while private terminals said competition was killed as CEZ seized their cargos.
However, since 2011 the state has obliged shipping companies - via verbal order only - to implement customs clearance of cars alone at CEZ, while the remaining cargo could be cleared at private terminals. Maritime lines protested this immediately, but to no avail. The practice still continues and the problem would be even more aggravated if all cargo were to be cleared via one, privately owned terminal.
“Actually clearing cargos via one state-owned terminal is in line with the international practice; this balances competition by keeping service prices low, and makes the transit image of the country attractive,” a freight forwarding business source, who preferred not to be named, told GJ. “But to give this exclusive right to a privately owned terminal and put it into a monopolistic position is inexplicable.”
RS denied the terminals’ grievances. As RS informed GJ, the verbal order on cars’ obligatory clearance at Poti CEZ was made legal due to the goods’ specific nature, but other cargos bear no restrictions not now in prospect.
Iashvili calls the statement a lie: “They have already announced at a meeting with terminals that starting May 1st all goods must be declared via Maersk terminal in Poti CEZ. Customs clearance can be implemented at other terminals, but it is burdensome to drag cargos from one terminal to another when we can take them in at our terminals immediately, as we used to. Secondly, customs officers already ignore other terminals and never come for clearance procedures. We will start a tide of protest soon.”

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