IMPACT OF REPEAL OF CONFERENCE ON EUROPEAN LINER MARKET

Abstract

In September 2006 the European Council decided to repeal Regulation 4056/86 with effect from October 2008. The primary issue addressed in this study is the impact of repeal of block exemption in Europe on two major Europe-based trades - the United States/North Europe trade and the Far East/North Europe trade. This paper measures empirically the economic impact of the repeal of conference on competition of EU liner shipping. Adam Smith's theory of joint products is adopted to examine the impact of the repeal after 2009. This paper considers head haul and backhaul container shipments as joint products. Two statistical equations are employed to reinterpret Smith's condition of joint products. Analysis results using available information from 2010 through 2012 reveal that the EU's repeal of conference produced a striking difference in how carriers react to deregulation reform in the two major Europe-based trade lanes.