Series Title | European Voice |
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Series Details | 21/01/99, Volume 5, Number 03 |
Publication Date | 21/01/1999 |
Content Type | News |
Date: 21/01/1999 By THE world's most powerful container shipping lines are still licking their wounds after a bruising anti-trust battle with the European Commission which climaxed last September in record fines of €273 million. The 15 US, European and Asian members of the Trans Atlantic Conference Agreement (TACA) are appealing against the fines. They have, however, dropped the controversial practice of jointly fixing rates for the inland transport of containers - one of the Commission's key objections. The outcome of the case has clearly rattled the industry. Twenty two of the 23 lines plying the North Atlantic plan to replace TACA with a 'discussion forum', which they hope will avoid the wrath of the Commission. The lines were consoled by the fact that TACA helped to increase freight rates, leaving them better off even after paying the fines. They are also facing up to regulatory changes on the other side of the Atlantic now that US President Bill Clinton has signed the Ocean Shipping Reform Act, which will allow shippers to negotiate confidential agreements with individual lines. The twin developments in Brussels and Washington have cast doubt on the survival of so-called 'steamship conferences' which have been collectively setting rates and organising services since the 19th century. Shippers, delighted at the humbling of TACA, are nevertheless worried that a free-for-all might not be in their best interests. While they attacked conferences for their cartel-like behaviour, they appreciated the fact the member lines guaranteed services which operated as regularly as clockwork. Conferences have been losing market share to independent operators for years but some still wield considerable clout, like the Far Eastern Freight Conference which accounts for nearly two-thirds of traffic in the Europe-Asia trade and is used as a pricing and service bench-mark by the independents. The regulatory changes have coincided with unprecedented volatility on key routes. Traffic from Europe to Asia has plummeted, but it is booming in the opposite direction with ships carrying 95-100&percent; loads. The industry has responded to years of falling freight rates and excess capacity by forming vessel-sharing alliances and consortia, which are allowed by the Commission under certain conditions. More recently, the sector has embarked on mergers like that of the UK's P&O and Nedlloyd of the Netherlands, and acquisitions such as the purchase by Singapore's Neptune Orient Lines of American President Lines. That process is set to continue. Germany's Hapag-Lloyd is the analysts' current take-over favourite, while US carrier Sea-Land is constantly being spoken of as a target for Denmark's giant Maersk Line, the world's top container carrier. The industry is finally in sight of better times, with global supply and demand forecast to move into balance by the end of this year. There are two other safe predictions: the market will be controlled mainly by a group of mega-carriers like Maersk, P&O Nedlloyd, Taiwan's Evergreen and Cosco, the Chinese carrier, and they will be sailing ever-larger ships. The current generation, which carries around 6,000 containers each, will soon be dwarfed by vessels able to load 8,000 boxes, and the 15,000-container ship is already on the drawing board. |
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Subject Categories | Mobility and Transport, Politics and International Relations, Trade |
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