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Imperial asks Commission to probe airfreight market
Imperial Logistics has urged the Competition Commission to investigate anti-competitive behaviour in the airfreight market.
The company said in a statement on Thursday (19 September) that it had made an urgent request for the commission to initiate a market inquiry into the general state of competition in the domestic overnight express airfreight market.
"This industry is in a state of escalating crisis and our intention is to draw the commission's urgent attention to non-commercial conduct and structures that are preventing‚ distorting and restricting competition‚" said Imperial Logistics chief integration officer Cobus Rossouw.
He stressed that this had serious implications not only for the market concerned‚ but also for related industries and SA's economy.
"The ramifications are far reaching. It is clear that‚ if unresolved‚ this crisis is likely to negatively affect key sectors of SA's economy because of the significant knock-on effects on productive capacity‚ efficiency and pricing of goods and services in general," Rossouw said.
Detailed submission
In an expansive submission to competition commissioner Shan Ramburuth‚ Imperial Logistics provided details of non-competitive conduct by state-funded SAA Cargo‚ which is the dominant company in this market alongside only one private operator‚ Imperial Air Cargo (IAC) - a joint venture between Imperial Group and Comair.
Among other points‚ the submission outlines SAA Cargo's failure to pass on increases in major costs to customers - such as fuel‚ landing and handling‚ air traffic navigation‚ aircraft leases and the impact of exchange rate deterioration.
"SAA Cargo has frozen its prices since April 2012‚ despite the impact of increased costs and deteriorating exchange rates. It has only very recently intimated that it would increase its prices. It is our view that SAA Cargo's conduct can only be seen as an exclusionary strategy to eliminate the only remaining competitor‚ IAC‚ from the domestic overnight express airfreight market. There are compelling grounds to justify the Commission launching an enquiry into this market‚ on an urgent basis‚" said Rossouw.
"Failure to do so may result in the overnight express market slipping into a subsidised State-owned monopoly‚ which would lead to a substantial increase in prices and a reduction in both efficiency and reliability in the domestic overnight express airfreight market‚" Rossouw concluded.
Source: I-Net Bridge
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