HKSG conference: Shipper-carrier distrust persists, but most optimistic on recovery

A RANGE of supply and demand risks and opportunities were aired at a shipping conference yesterday at the Hong Kong Convention and Exhibition Centre where "cautious optimism" on the global recovery was also expressed by speakers from carriers, shippers and forwarders.

Carriers' desperate need for cash flow to sustain themselves and satisfy their bankers impelled them to do "foolish things" in the midst of the global downturn, Philip Chow, CEO of Orient Overseas Lines (OOCL) told some 200 shipping industry executives.

 

Mr Chow said allowing freight to be shipped at below cost was foolish and meant that it would have been better if carriers had shipped nothing, and that the industry was now paying for the mistake which had cost them billions in lost revenue.

Speaking at the Supply and Demand 2010 2012 New Horizons conference sponsored by HKSG Media Ltd, Mr Chow said the "fill the ship mentality" that dominated the trade in 2009 and was responsible for higher rates and surcharges today after the industry.

Lars Jensen, marketing chief at The Containership Company, the new start-up which runs a shuttle from Taicang to Los Angeles, agreed, but said the demand growth before the global downturn was not healthy and depended on a credit boom in the west that was unsustainable and continued to pose dangers for the future.

Shippers, represented by Sunny Ho, executive director of the Hong Kong Shippers Council, and Nicolette van der Jagt, secretary general of the European Shippers Council, expressed anger that carriers were taking advantage of demand by artificially enhancing it by withdrawing capacity and making containers scarce.

Ms van der Jagt said the European Union's banning of the Far Eastern Freight Conference did not have the desired effect because carriers continue to collude on freight rates and allow capacity restrictions to justify increases in rates.

Mr Ho produced evidence showing that carriers appeared to be colluding on rates and surcharges because various notices to trade announcing surcharges and rate increases came from quasi conferences such as the Transpacific Stablisation Agreement, and from other lines attached to alliances shipping alliance or "conferences". The charges were in the came amounts and took effect at the same time even if they appeared to come from separate shipping lines.

"Shippers are miserable and very unhappy," said Mr Ho.

But Soren Karas, Maersk vice president for Hong Kong and south China, reminded delegates that when times were bad and carriers were losing billions, shippers 'broke their contracts and took a lower price for the year". Now the tables had turned. "Desperate times required desperate measures," he said.

Paul Coutts, of Toll Global Forwarding, hoped that a balance could be struck and that greater trust and transparency could be established between carriers and shippers, as forwarders were often caught in the middle of such disputes.

Andrew Milliken, CEO of Da Chan Bay Phase One container terminal, said the conferences provided the "stability that everyone seems to be seeking here".
(source:www.schednet.com)